April 2006

The foreign trade increased by 25.6 percent in the first three months of this year, the exports exceeded the level registered in the similar period of the previous year by 21.9 percent, and the imports by 28.4 percent, said a release of the Romanian Ministry of Economy and Trade. The FOB exports reached 6.21 billion euros, up 1.12 billion euros from the same period last year, mainly due to the capitalization of the advantages of the Romanian products on the foreign markets, "ACT Media News Agency" reports.


In the exports' structure, the cars and the electric equipment or components increased by 390.17 million euros - 46.44 percent, the oil products by 271.4 million euros - 54.41 percent, and the cars by 188.5 million euros - 30,81 percent.

On the European market, the exports rose by 673.63 million euros or 18.8 percent, while the exports to Eastern Europe rose by 59.83 percent, to United States - by 25.42 percent, to Africa and the Middle East - by 20.6 percent, to Asia-Oceania - by 20 percent. Nineteen percent of the exported products went to Italy, 15.21 percent to Germany, and 7.28 percent to France.

The CIF imports increased by 1.9 billion euros (28.4 percent) to 8.57 billion euros in the first three months of 2006 against the similar period of 2005. The growth was significant, of 558.9 million euros or 37.83 percent when it comes to cars, electric equipment and their components. The imports of energy, raw materials, gas and coal rose by 399.5 million euros or 39.85 percent, those of cars and their components - by 219.5 million euros or 35.14 percent.

The main import markets in the first quarter of 2006 were the European Union - 60.23 of the imports, Eastern Europe - 23.37 percent and Asia-Oceania - 14.72 percent. The main partner countries for imports were Italy - 14.23 percent of the total, Germany - 14.02 percent and the Russian Federation - 10.49 percent. In the first quarter of this year, the trade deficit stands at 1.57 billion euros, up 49.5 from the first quarter of 2005.

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The Hungarian oil and natural gas company, MOL, has directed most of its net profit for 2005 to the creation of financial reserves in view of development. One of the objectives is the expansion of the gas station network in Romania. "The company considers new acquisitions but because we cannot be sure of the precise moment we have to make available the financial resources," said MOL Exploitation and Production Director Zoltan Aldott. At the end of last year, the company had 137 gas stations in Romania and a market share of 13%.

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The oil services division of the Romanian group Rompetrol, has registered a nine-time profit increase to 1.84 million euros last year, according to data submitted to the Bucharest Stock Exchange (BVB).

More than half of the profit, about one million euros will be directed to the partial coverage of the losses recorded in previous years while the rest will go to the company's reserves. The turnover of Rompetrol Well Services increased last year by 19 percent to 15.58 million euros, over 13 million euros in 2004, when the profit attained only 208,000 euros.
For the current year, the company's shareholders approved at the April 26 general assembly the target of a 13.02 million euro turnover and a 1.64 million euros profit. The company would also invest approximately 1.7 million euros.

The group Rompetrol who controls it with a 70.4 percent acquired in 2000 Rompetrol Well Services, formerly known as Petros Ploiesti. The company's activities include special well operations, well equipment rentals and equipment transportation.
According to the company's own estimates, Rompetrol Well Services has a 35 percent share on the market of special well services.

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The European Commission did not affirm that Romanian mines could continue to receive state aid on a continuous basis after accession, says the institution's spokesperson Angela Filote yesterday in a press release.
At a meeting in March between European Commission officials from Competition Department and representatives of the Romanian Ministry of Economy and Trade, there was a discussion of the general conditions in which state aid for mines might be possible, Filote explained.

The only possibility for such aid would be for it to be approved as part of a restructuring plan drawn up for those mines, and only those, considered viable. Any such plan, together with the intended aid package, would then have to be submitted for authorization to the Romanian Competition Council, exclusively competent to judge the compatibility of such aid before Romania's accession to the EU. The respective restructuring programs would have to be in place before January 1, 2007, since it would not be possible to continue to grant operating aid after that date outside a previously approved restructuring package.

At this stage, the EC officials took no position on the possible compatibility of such restructuring plans and the resulting aid with EU rules, underlining that the matter falls under the responsibility of the Romanian Competition Council. After EU accession, it would be for the European Commission to assess all new state aid measures taken in the new member state. In practical terms, the granting of state aid would still be possible after accession, providing that the measure be in line with the relevant EU rules and regulations.

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Inspectors from Consumer Protection showed that 60 percent of the verified tourism agencies in April violated the laws set for tourism activity.
The measure adopted by inspectors resulted in 145,000 euros in fines and the closing of some agencies.
Consumer Protection verified 280 economic agents active in the tourism sector and found irregularities in 168 cases. Seventeen agencies were verified in Bucharest and 14 of them received fines totaling 3000 euros.

Inspectors checked the existence and validity of license certificates, tourism licenses and licenses of the agencies directors.
Other verifications focused on whether tourism agencies offered tourists information referring the location and category of the health resorts they must go to, the means of transportation and other similar information.
The laws regulating tourism activities force agencies and health resorts to solve any complaints regarding the offered services immediately. Any tourism agency must have qualified personnel as tourism agents, use licensed touring cars and have the proper services food and accommodation.

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Vodafone will finalize the re-branding process of the local mobile phone operator Connex within three months, which the company took over in 2005, company officials stated yesterday. The modification was registered in the Trade Registry on April 18. The operation became possible after the settlement of the litigation that opposed the operator to Telemobil, it's a local company who had registered the brand name Vodafone back in 1995, before the entry on the Romanian market of the British group. The brand Connex has been present on the market since 1997.

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Commercial companies could pay a three percent, three-year tax from their profit for the gathering of funds Romania will need once it joins the EU, according to a law project of the Conservative Party.

Conservative Party President Dan Voiculescu announced the proposal on Thursday. "Everyone believes accession to the EU to be beneficial for Romania. Joining the EU will generate very large costs. In 2007, we will have to contribute approximately 1.5 billion euros to the EU budget. The amounts received in 2007 are much lower than the funds which we shall have to contribute," Voiculescu said. He showed that there joining the EU poses a "great danger" for Romania and that accession to the EU will deepen the degree of poverty affecting "a large part of the population" now. In this respect, the Conservative Party will make a proposal in Parliament next week for the implementing of a three percent tax to be applied along the tax paid by any company that obtains a profit for a period of three years.

"The 1.5 billion euros should be paid by those who managed to find prosperity in Romania, not by the masses, which do not obtain profits, but income," Voiculescu said.

The tax, which is called a "financial accession effort," might be applied to commercial companies for a period of three years, 2007-2009 respectively. In the opinion of Conservative leaders, this period is believed to be most critical once Romania joins the EU. Voiculescu added that this financial effort would not be needed beginning 2009. The Conservative President insisted in showing that he will be the first to pay the tax referring to the accession financial effort. The group controlled by Voiculescu obtained a 46 million euro profit in 2005. Voiculescu claimed that this tax would be "an act of solidarity" with the poor parts of the population. Given that they are supporters of programs for the development of SMEs, the Conservatives showed that the introduction of the three percent profit tax would in no way affect SMEs.
Voiculescu said that he would discuss this law project in a meeting with the Prime Minister next week.

Contacted by Bucharest Daily News, Capital Editor in Chief Ionut Popescu said that the a solidarity tax which would support Romania's post-accession efforts to comply with EU requirements is necessary, but it should be paid not only by companies which register profit, but also by companies with losses or even by employees. Economic analyst Ilie Serbanescu had a similar point of view, stressing the necessity of such a tax and its positive effects. However, Serbanescu said that the tax cannot be operational and that it would favor companies that do not obtain profit. He added that it is positive to protect the population from the large costs of accession but that in the end the population would end up paying for the accession as costs would rise due to increase taxation of profits.

EU Finance Ministers will ask Romania next week to increase certain taxes to raise state budget revenues and encourage investments in view of EU accession. The ministers believe that the introduction of the flat tax last year creates difficulties in covering expenses related to EU accession. Furthermore, reducing taxation could unbalance public finance, in case the current favorable cyclical situation ends. The flat tax was introduced on January 1, 2005 replacing the 25 percent profit tax for companies and a system of quota between 18 and 40 percent, depending on the value of income, for individuals. The share of state budget revenues in the GDP is currently lower in Romania than in any of EU member states.

The International Monetary Fund, whose recommendations are taken into account by the EU, estimates that Romania needs to increase budget revenues to 35 percent of GDP from the 29.7 percent registered in 2005. At the same time, finance ministers will recommend cutting expenditure to diminish the budget deficit. The government revised the target last week for this year's budget deficit from 0.5 percent of GDP to 0.9 percent of GDP in order to increase expenditure for investment and social projects. "The credibility of the Romanian public expenditure policy depends on the adopting of more prudential measures in the field of budgetary personnel retribution, on the capacity to reduce current expenses and on the improvement of the capacity to absorb European funds," the EU document says.

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Siretul Pascani last year posted a profit of 317,399 RON before tax, which is 67 percent lower over the previous year. The company's gross profit also dropped by 70 percent, from 1.2 million RON in 2004 to 375,435 RON in 2005.

The company's net profit last year was distributed to the shareholders and to the establishment of a legal reserve, reads a company's release. This year Siretul Pascani plans to post a turnover of 26.5 million RON.

This year the company will invest around 432.000 EUR, money that will come from last year's profit and the one raised after the bond issue from 2004.

Shareholders of tyre producer Danubiana on April 10 decided that the company should sell a 354,013 sqm plot which is located at 181 Oltenitei str. The price per square meter is of 25 EUR.

Following this operation, the company should raise some 8.85 million EUR o support their further activities. Danubiana has a share capital of 45.9 million RON, divided in 18.3 million shares. The company's majority shareholder is Tofan Grup International, follwed by Proprietatea Fund, with 9.85 percent.

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Galati-based Mittal Steel announced that it will increase its share capital by 61.6 million RON. Mittal Steel Holdings AG has underwritten some 24.664.800 shares after the general shareholders meeting that was organized on February 9. The overall amount gathered after this operation was of some 20 million USD. Another meeting will be called for May 5.

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Niro Group will this year invest around 70 million EUR, said Violeta Lungu, image director of the company. The company will invest in the expansion of the Red Dragon commercial area and add 1,300 stores and complete the first four blocks in the Chinatown Romania residential quarter.

At the same time the company will initiate work on the 100,000 sqm business center in the complex. At the same time the group initiated the consolidation work at the Bulevard hotel, which costs around 10 million EUR.

She added that last year Niro Group invested around 56 million EUR. Last year the company completed work on the Herastrau multifunctional complex, on Dragonul Rosu Mega Shop complex and initiated work at the Central Park residential quarter.

Niro last year posted a turnover of some 17 million EUR, 17.5 percent more than the one posted in 2004. Last year, the company's profit before taxes was of 2.8 million EUR. This year the company's representatives estimated a 25 percent increase in the turnover.

The company employs 1,200 people and has owns the Nirocenter office building and the land underneath it, the 10,000 sqm Herastrau office building, an industrial platform in Chiajna, a 7,800 sqm production unit and administrative building in Jilava, the "Grand Hotel du Boulevard" building, a 80 hectares plot in Colentina - Fundeni, the Cafeneaua Veche and Crama Domneasca buildings and more land in countries in Romania.

Violeta Lungu said that Niro Group is mainly collaborating with the 2,000 business operators that are active in the Red Dragon commercial area. For its investments the company also works with Arcom, Apolodor, Proiect Bucuresti, Milenium Clima, Tungal, UTI, Colliers, Alfa Bank, Unicredit, RIB. According to her, the group plans to expand activities to other cities in the country.

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The Agency for Governmental Strategies (ASG) by a government decision received an extra budget of 4 million RON to finance four new projects. The four projects aim at decreasing small corruption in public institutions, improving the image of Romania abroad, explaining European accession issues to people living in the country-side

The "Transparent Romania" project, which will receive 1.5 million RON, aims at decreasing the cases of small corruption within public institutions by informing citizens on anti-corruption laws and access to information.

"European Romania" project will receive 1 million RON. It comprises an analysis on the manner Romania is seen abroad, as well as the implementing of projects to promote our country. "European Village" is a project that aims at spreading information on European accession and it will receive a budget of 500,000 RON.

Information will be given especially about manners to access structural funds, costs and benefits of accession and main projects and European policies with impact for the rural population. Another project, called "To an Efficient Governing," will be implemented for the research and optimize governmental policies and will have a budget of 1 million RON.

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The shareholders of the Bucharest Stock Exchange (BVB) approved on Thursday the merger with the Sibiu Financial-Monetary and Commodities Exchange (BMFMS), announced BVB Director General Stere Farmache. "The merger will need to be approved by the shareholders of the Sibiu Exchange. Then, the administrative boards must prepare the merger projects. The effective merger will be discussed in other general shareholders' meetings. It is difficult to estimate an exact date as to the closure of the merger. Normally such an operation lasts about four months," Farmache said. BMFMS shareholders had approved, at the beginning of February, a collaboration protocol with BVB in view of the merger, but had not agreed on increasing the nominal capital, delaying talks on the subject until May. 

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Banca Tiriac modified its whole range of loans by adopting a product portfolio, which will be promoted by the new bank resulted from the merger with HVB Bank, shows a Thursday institution statement.
"Presently, by starting the implementation of the product portfolio of the future bank, Banca Tiriac will make its clients a completely new offer of loans," stated the Vice-President of Banca Tiriac Catalin Parvu.
The new portfolio includes two types of loans for personal needs "Loans for Anything," which can provide amounts up to 10,000 euros without guarantees and up to 100,000 euros if a mortgage is provided.
Moreover, Banca Tiriac will also grant two types of real estate credits for construction and acquisition of dwellings and two mortgage loans for the same purposes. The closure of the merger deal between the two banks is expected in August 2006.

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The trade balance deficit hiked by 49.5 percent, to 2.3 billion euros, in the first quarter of 2006, after a high rate of increase for imports, according to data issued by the National Statistics Institute (INS).
Exports increased by almost 30 percent, to 6.2 billion euros, compared with the same quarter of 2005, while imports advanced by 28.4 percent to 8.6 million euros.
The monthly value of exports reported in March 2006 was the highest registered since 1990, advancing by 20.7 percent, or 2.3 billion euros.
Imports advanced by 25.9 percent to 3.28 billion euros.
Technology imports, comprising cars, mechanical devices, home appliances and electronic goods, increased by 37.8 percent to 12 billion euros. They hold a 23.8 percent share of total imports.
Romania imported mineral products amounting to 1.5 billion euros, up 35.4 percent, this category holding a 17.5 percent share of total imports.
Exports of mineral products hiked 53.3 percent to 795 million euros.
Trade with EU states registered a 68.5 percent share of exports and 60.2 percent share of imports.
Iuliu Winkler, the delegate minister for trade, stated in mid-March that despite an estimated 15 percent increase of exports, 2006 would be another year of trade deficit.

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The Competition Council has opened an investigation on the coffee, chocolate and sugar market as a result of Kraft Romania's exemption demand for its contracts with its distributors. The competition legislation allows certain types of agreements between competitors on the same market, under certain conditions. The principle of allowing deals that affect free competition on the market when benefits are superior to disadvantages was adapted from European legislation. When companies demand an exemption from the law, the competition authority automatically starts an investigation on the market to assess the existence of the conditions that would justify it.

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The European Commission (EC) approved four new SAPARD programs amounting to 100 million euros, the largest part of the sum being intended for the creation of sanitary-veterinary laboratories and environmental protection, announced the Payments Agency for Rural Development and Fishing (APDRP).

Samoila Szabo, the agency's general director, said that potential beneficiaries could utilize SAPARD by the end of the year, because it offers a wide range of investments suitable for financing.
"We expect the forestry project to attract many investments, especially for the financing of forest roads," said Szabo.
The APDRP will start receiving financing requests beginning in March for programs concerning the creation of sanitary-veterinary labs and for food safety (41.2 million euros), the creation of producers' groups (2.7 million euros) and forestry (40.6 million euros).

The agency has approved projects worth 718 million euros so far, which account for only 56 percent of SAPARD funds allocated by the EU for Romania. The state secretary in the Ministry of Agriculture, Danut Apetrei, said last week that he found the figure to be unsatisfactory. The EC is also concerned about the poor fund absorption rate, as grants to Romania would increase significantly after accession to the European Union.

The agency received 271 financing requests in March, an improvement compared to the 170 requests valued at 34 million euros the month before. The largest funds will be allocated to 35 projects, valued at 29 million euros, in the food processing industry. The funds were distributed mainly to meat processing, dairy production, and fruit and vegetable businesses. The agency received 136 farming investment projects, worth 15 million euros, and rural tourism saw a 4.5 million euro demand for projects, almost exhausting the funds allocated for this sector.

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The head of the IMF delegation Emmanuel van der Mensbrugghe urged the government to elaborate a medium term financial strategy.

A team from the International Monetary Fund (IMF) will come to Bucharest in the second half of the year for the elaboration of a macroeconomic strategy for the post-accession period.
Minister of Finance Sebastian Vladescu attended from April 22 to April 23 the spring meeting of the IMF and the World Bank, where this decision was made.
"In this period of utmost importance leading up to the accession, authorities and IMF experts continue dialogue for the establishment of a stable framework," said representatives of the Ministry of Public Finance (MFP).

One of the main topics discussed with IMF representatives was the recent budget rectification and the Romanian government's decision to raise the budget deficit target from 0.5 percent of the gross domestic product to 0.9 percent. Romanian officials explained that the rectification was necessary to create financial resources for investments that will benefit from European funds after Romania's accession to the EU. "Not allocating additional resources for the immediate preparation of investment projects in priority fields such as transportation, education, health and environment could lead to the reduction of the absorption capacity of European funds that Romania would be granted as a member of the EU," argued the MFP representatives.

Romania dropped the stand-by agreement with the IMF in October last year, as negotiations regarding the budget deficit for 2006 and the measures to be adopted for the reduction of macroeconomic imbalances failed.

The IMF delegation, headed by the chief negotiator for Romania Emmanuel van der Mensbrugghe, at that time criticized some of the policies adopted by Romanian authorities in 2005. The introduction of the 16 percent flat tax, they said, created an income shortage of 1.5 percent of the GDP to the state budget. The nearly one billion euro deficit was allegedly compensated by measures that caused uncertainty in the business environment. The IMF delegation affirmed that a clear focus was needed on the medium-term to synchronize public policies with the needs of a modern European economy with a low inflation rate. By applying the policies it introduced at that point, the IMF argued, Romania risked joining the EU with a poor-level of competitiveness, increasing macroeconomic imbalances, deteriorating health and education services and great gaps in material infrastructure.

The IMF delegation believed it was urgent that fiscal policies be given a durable medium-term base. The structure of the 2006 budget project did not compensate for the income loss in 2005, which resulted from the introduction of the 16 percent flat tax. IMF experts claimed that postponing the introduction of measures for the compensation of flat tax side effects would affect the necessary reduction of social security contributions. They called to mind that in Romania, budget income as a percentage of the GDP was considerably lower than that of EU member states, those in the last wave of enlargement included. The IMF insisted that additional income was necessary to finance education, health and the expenditures connected to the EU accession process.

According to Bloomberg online, finance ministers from the EU would call Romanian authorities sometime next week to consider the raising of certain taxes in order to increase the level of budget revenues and encourage investments. The ministers believe that the introduction of the flat tax last year creates difficulties in covering expenses related to EU accession. Furthermore, reducing taxation could unbalance public finance, in the event the current favorable cyclical situation ends. The flat tax was introduced on January 1, 2005 replacing the 25 percent profit tax for companies and a system of quota between 18 and 40 percent, depending on the value of income for individuals.

At the same time, finance ministers will recommend cutting expenditure to diminish the budget deficit. "The credibility of the Romanian public expenditure policy depends on adopting more prudential measures in the wage strategy of the public sector, on the capacity to reduce current expenses and on the improvement of the capacity to absorb European funds," the EU officials said.

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By Ileana Boboc

"We don't want people to shop abroad; we want to offer them the opportunity to shop in Romania," said Baneasa project's retail development director, Ali Ergun Ergen, on Wednesday in an interview for Bucharest Daily News. Ergen announced several novelties to be found at Baneasa Shopping City, the largest commercial center in Romania, which was initiated on April 19 and aims to become the most modern shopping and entertainment facility in Romania. A project of Baneasa Developments, Shopping City is part of the commercial platform that will include flagship stores of Metro, Bricostore, Mobexpert, Carrefour and IKEA. The retail center will introduce for the first time in Romania a three-storey food court, providing all diners with a panoramic view of the entertainment space around them.
On the ground floor there will be a traditional food court with all the international brands already present in Romania, the first floor will be called "The Gourmet Promenade" and consist of elegant and casual restaurants, while on the second floor there will be a cosmopolitan court with "exotic food and drinks" from all around the world.
Baneasa Shopping City is also intended to be a leisure and entertainment center for the whole family. Facilities will include a professional supervised children's area, an indoor, year-round skating rink and a Family Entertainment Center with the very latest in family fun.
The Shopping City will also offer the largest parking area in Bucharest, more than 10,000 parking spaces, of which 1,500 will be underground. The investment in the project is estimated at over 150 million euros and should create more than 2,000 jobs.
Baneasa Shopping City is scheduled to open its gates to the public in the late fall of 2007.

I know you have recently started working for Baneasa Developments after having worked with Anchor Plaza. How do you find this career change and its challenges?
Having worked in Romania for seven years now, I have achieved so many goals, so something had to be very challenging for me to get involved. I have been with Baneasa Developments for almost three months and I was sincerely amazed when I first had the picture of the organization last year but I did not know the whole dimension of this project. However, once you become a part of it you meet the people involved, you get to know the organization, the projects and the core idea behind all of this. It is always good to be a part of something new coming up, a project of these dimensions. Moreover, it is important to not only be a part of it, but also be in the center of it, build it. It's a very astonishing experience for me.

You introduced the mall concept in Romania through Bucharest Mall. What changes have you noticed throughout the years in this sector?
Seven years ago the retail market was all about shops on the city streets. However, this concept means more than shopping, it also means entertainment and leisure, all in the same place, for people to enjoy it. I strongly believe this concept will be successful in Romania. Certainly, we have to keep moving and bringing new concepts and new trends to the Romanian market, because people are traveling to different countries more than before, are exposed to different cultures and have the opportunity to see various things. Having built two shopping centers until now (Bucharest Mall, Plaza Romania), we shall use our experience to make this new project better.

What are the latest developments on this project?
There is a huge expansion in the north of the city. Basically, the core of the city is gradually moving to the north. When I came here, seven years ago it was believed that the center of the city would be Piata Unirii. Today we can see that the center is moving north. The Baneasa Shopping City project is a different concept in Romania. It is a global shopping center. It is going to become a destination for the people of Bucharest. We shall make sure people will have everything there: the shopping center, IKEA, Carrefour, Bricostore, Mobexpert, Motocity (a car showroom).
The shopping center will be surrounded by a neighborhood in which 20,000-25,000 people with high-incomes live.

What are the challenges concerning infrastructure? Do you think authorities can cope with this situation?
Infrastructure is not a problem of today or tomorrow. Romania, being an emerging country, resembles other countries in the region from this point of view. The problems in infrastructure are a consequence of the major developments in Bucharest. In Bucharest I am sure that authorities are very keen to address this issue. The major investors are moving so fast, it is becoming somewhat of a burden for the state. It is an inevitable problem because investors come to Romania and entire regions are growing, and it will take some time to solve it. We all have to be a little bit patient, but I am confident that the City Hall will address this very soon. 

Could you inform our readers of future projects of the company?
The whole project is very big; we plan to build other global shopping centers in the country, possibly one more in Bucharest. First we need to deliver this project and see how it will be functioning and how the concept works. Then we will probably focus on other cities as well.

You said that the center will bring new brands to the Romanian market. Which are they?
We are talking to many brands right now, some significant international stores, new brands also, but we have not formally signed anything yet, although we are very close to doing that. We want to launch the project first.  I can tell you that our discussions with cinema operators, entertainment center operators, and department store operators are very advanced. There are going to be new brands for sure and they will be announced by the end of the summer.

A lot of companies have tested the Romanian market years, some eventually entered, and some did not. What is your view on this matter?
After seven years living in Romania, I honestly say that I feel as if I were a Romanian citizen. When I travel abroad and attend conferences and seminars, I very often try to talk to people about Romania, its performances and the opportunities in this country. Unfortunately, the analyses some companies make before entering a new market are very much based on statistics and sometimes statistics alone do not necessarily reflect reality. Therefore, we should be addressing and trying to promote the country's image. All the investors should make sure that they properly promote this country, because if you look at the revenues that some retailers have obtained here, they are far higher than in other European countries. And we don't want people to shop abroad; we want to offer them the opportunity to shop in Romania.

Indeed, many people with high incomes living in Bucharest prefer to shop abroad right now. Why do you think that is?
It is a matter of variety and choices. The presence of international brands on the market is still not significant enough and way behind neighboring markets. That's why many people shop abroad - for better choices and lower prices. Nonetheless, many new brands every day are knocking at the door. It is a matter of time; as the supply of quality retail space grows, more retailers come to Romania.

Although statistics on living standards in Romania are discouraging, as you have said, retail profits are high. Could you explain this paradox for somebody who has never been to Romania before?
It is a booming market. The economy has a stable growth and people earn more money and they also spend more. Lots of investments and many new developments appear daily. The way people live their life is changing, now people consume more, they follow fashion, they buy luxury items, people's priorities about life have changed. That perfectly explains the paradox. 

What can you tell our readers about your personal experience in Romania?
I believe Romania has great potential, not only because it is a beautiful place to live, but also because it has huge human resources potential. There are many people with good education, strong background, ambition and foreign language skills.
Currently I am trying to learn Romanian. My whole life is here. I am a civil engineer and I came here to work as a civil engineer, but my whole life changed. By coming here, I totally changed my career path too. I like the environment and the people very much. I go to my country pretty much as a visitor. I find it easy to adapt here because people are very friendly, you make friends easily and there are some similarities between Romania and Turkey. I know for a fact, that many foreigners adapt quickly and easily to Romania. I am definitely thinking of a future in Romania.

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Danone Romania estimates for this year a turnover increase of 45 percent compared to the 70 million euros recorded in 2005, stated yesterday the company Marketing Manager for the Balkans region Benoit Chaix du Laverene.
According to Laverene, during its ten years of activity on the Romanian market, the Danone turnover has continually increased. In 2005, it went up by 45 percent and in 2004 by 33 percent.
Laverene believes that the demand for dairy products on the national market is currently on an upward trend, as the annual national consumption is currently around four kilograms per capita, compared to 33 kilograms in France.
Moreover, the company management intends to increase the production capacity in Romania, which might even double in the future depending on the market evolution, says Laverene.
Danone also activates in Romania on the snack production market.

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The reactors 2 and 3 of Cernavoda Nuclear Power Plant (southeastern Romania) will be commissioned at a time when Romania will already be a member of the European Union, which means enhanced responsibility related to the enforcement of the nuclear safety standards in line with the national strategy correlated with the EU strategy, said the chairman of the National Commission on Nuclear Activity Control (CNCAN), Vilmos Zsombori, ACT Media news agency reports.

"The national strategy on nuclear safety for 2006-2009 lays down clearly defined objectives for meeting the EU accession requirements and the short-term completion of the action plans resulting from the recommendations made by the experts' missions of the Vienna-based International Atomic Energy Agency and of the specialists of the Western European Nuclear Regulators Association", Zsombori told the international conference called "Meeting the nuclear safety requirements, a key to the development of the Romanian nuclear power." As many as 440 nuclear reactors produce electricity in 31 countries across the world, and 15 countries rely on the atomic energy for at least 25 percent of their electricity needs.

The production of nuclear power in Romania last year accounted for 9.3 percent of the total energy output. "France, with nearly 70 nuclear reactors of various power secures about 80 percent of its national electricity demand and in this respect it is independent of what happens in the region.

Italy, on the other hand, is not independent energy-wise, because its citizens do not understand the need to develop nuclear energy and, therefore, it imports energy from France.

In this context, the achievement and commissioning of Cernavoda's reactor 2 in 2007 and of Reactor 3 by 2013, under the conditions set by the Nuclear Safety Strategy, would get Romania into the top of the countries operating nuclear facilities at world standards.

Today's achievements in nuclear safety, 10 years since Cernavoda's Unit 1 has reached its nominal power, cannot be denied.

The concept of in-depth defence is implemented in the nuclear projects. The incidents worldwide are extremely rare in this sector. However, the specialists should never forget the nuclear catastrophe at Chernobyl, that took place on April 26, 1986", the CNCAN chairman stressed. The 2006-2009 Nuclear Security Strategy aims to ensure the use and management of radioactive materials under conditions of physical protection, to take efficient measures for the regulation and actual achievement of the management of radioactive waste, radioactive materials, nuclear fuel that should ensure the safety of the citizens as well as of the environment.

The Strategy targets a closer cooperation between CNCAN and the Romanian Radioactive Waste Management Organization (ANDRAD), the improvement of the nuclear safety performance at the research reactors and enhanced capability of response to emergencies.

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The improvement of the business environment, the effects of the flat tax and the positive attitude of foreign partners to Romania led to drawing an important volume of foreign direct investments worth 1000 million euros over the period of January-February 2006, according to the National Bank of Romania, ACT Media news agency reports.

There was an increase by 94.1% of foreign direct capital entering the economy as compared to the same period of the previous year ( 515 million euros) ARIS ( Romanian Agency for Foreign Investment) informed.

Over the first two months of 2006, the most important component of foreign direct investments drawn by Romania was ? other capitals?, namely loans offered by the parent company to the branches in Romania ( 430 million euros representing 43% out of the total volume of ISD) followed by ? reinvested profit? ( 356 million euros making 35.6% of the total volume of ISD) and ? capital participations? ( 214 million euros standing for 21.4 % out of the total volume of ISD).

According to ONRC statistics, the social capital registered by trade companies with foreign participation to the capital reached, during January and February 2006 207.9 million euros.

Among the most important growths of capital undertaken by foreign investors during January-February 2006 we could mention:

Impress Buftea SA ? 24.4 million euros, CSR SA ? 19.8 million euros, Plus Discount Romania SCS ? 18.5 million euros, Agri Cokcept Europe SRL ? 18.4 million euros, Prolemn SA ? 11.5 million euros, Ambro SA ? 10.8 million euros.

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The Constanta-based company Oil Terminal (southeastern Romania), the biggest Romanian port operator, registered 69 billion old lei in net profit last year, double than forecasted and approved in the budget of revenues and expenditures, stated the company's general manager Mihai Lupu, ACT Media news agency reports.


"We exceeded the budgetary estimates due to the fact that in the economic field we operated efficiently by diminishing the expenditures, placing the money exactly where the company needed it," Oil Terminal's general manager said.

The company aims to become more flexible for the customers' needs and to eliminate the waste of time in operating the goods transited via Oil Terminal.

Some 75 percent of Romania's crude oil production and the whole production of chemicals for export are transited through this company.

"In 2005, we weren't late in the operations, not even one minute, and we were not involved in any commercial litigation," Lupu underlined.

In 2006, the company intends to assure the necessary equipment for the cleaning up of the polluted lands, an IT integrated managerial system, new storage capacities in the southern part of the city, as well as the modernization of berths and of the loading-unloading arms of the ships.

Oil Terminal company, a strategic point at Black Sea, supplies services linked to the receiving, storage, conditioning and shipping of crude oil, of oil products and liquid chemical products.

The oil terminal in Constanta is one of the biggest of this kind in southeastern Europe, being located at the crossing of the maritime transport corridors between Asia, Central and Western Europe and the Near East.

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The Bacau-based Dedeman group, which operates one of the biggest chains of stores and warehouses for construction and home decor materials, last year saw profit worth 25 million RON (7 million euros), double the figures posted in 2004.

The general manager of Roche Romania, Dan Zamonea, says he does not intend to challenge the leaders domestic pharmaceutical market, instead preferring to keep a low profile. The company, the number two on the domestic pharmaceutical market, is one of the few players embracing a less aggressive policy.

Supreme Chocolat, the producer of Primola chocolate and Ulpio biscuits, last year registered gross income worth almost 3.3 million RON (900,000 euros), up more than 90% year-on-year.

The local administrations in Romania have to improve the manner of managing budgets, as there will be problems in absorbing community funds, presidential counsellor Bujor Bogdan Teodoriu showed on Wednesday in a conference organised by Transparency International. In his opinion, Romania had tackled the issue of Romania?s accession to the European Union in a very superficial manner. From the persepective of following years will have problems connected to the efficient participation on the internal market and absorbtion of community funds, Teodoriu explained. The presidential counsellor considers that the capacity of the local public administration needs to be improved, to focus on institutional rationalisation and on the budgetary aspect of public administration reform.

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EU Finance Ministers will ask Romania next week to increase certain taxes to raise state budget revenues and encourage investments in view of EU accession, Bloomberg said. The ministers believe that the introduction of the flat tax last year creates difficulties in covering expenses related to EU accession. Furthermore, reducing taxation could unbalance public finance, in case the current favorable cyclical situation ends. The flat tax was introduced on January 1, 2005 replacing the 25 percent profit tax for companies and a system of quota between 18 and 40 percent, depending on the value of income, for individuals. The share of state budget revenues in the GDP is currently lower in Romania than in any of EU member states.

The International Monetary Fund, whose recommendations are taken into account by the EU, estimates that Romania needs to increase budget revenues to 35 percent of GDP from the 29.7 percent registered in 2005. At the same time, finance ministers will recommend cutting expenditure to diminish the budget deficit. The Government revised last week the target for this year's budget deficit from 0.5 percent of GDP to 0.9 percent of GDP in order to increase expenditure for investment and social projects. "The credibility of the Romanian public expenditure policy depends on the adopting of more prudential measures in the field of budgetary personnel retribution, on the capacity to reduce current expenses and on the improvement of the capacity to absorb European funds," the EU document says. The Government has announced plans to increase budgetary wages by 11 percent this year, after a 50 percent increase last year.

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Foreign direct investment (FDI) reached one billion euros in the first two months of the year, a 94 percent increase from the same period last year. The largest share of the foreign capital - 43 percent of the total - came in the form of loans granted by parent companies to Romanian subsidiaries. In the first two months of last year, foreign investments amounted to 515 million euros, according to a release of the Romanian Agency for Foreign Investment (ARIS), based on NBR provisional data.

Loans from parent companies amounted to 430 million euros while the value of reinvested profit was 365 million euros, accounting for 35.6 percent of the total. A 21.4 percent share of the total volume was covered by the 214 million euro contributions to nominal capital. "The effects of the introduction of the flat tax and the positive attitude of foreign partners towards Romania have lead to attracting a record volume of foreign direct investment in the first two months of  2006", the announcement reads. For this year, authorities target a 5.8-6.2 billion euros level of investment. For 2005, the NBR provisional data indicates foreign direct investment of 5.2 billion euros, and ARIS estimates that the revised level might surpass six billion euros.

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Romaqua Group will invest six million euros this year in extending the mineral water bottling capacities, the total amount of the investments made so far for development being 33 million euros, stated company president Octavian Cretu in a press conference on Wednesday.
The company built a new unit for mineral water bottling in Stanceni, Mures County, which will be operational starting mid-May.
The investment value is around three million euros, another three million euros being intended for increasing the bottling capacity for the Borsec factory, according to the Romaqua representative.

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The creation of privately administrated pension funds would result in the reduction of the budget of the state social insurance system by approximately one billion euros between 2007 and 2010, said Labor Ministry Advisor Silvia Limbidis yesterday.
"Solutions for funding this deficit could be the issue of long-term bonds, with maturities of up to 15 years, external loans or funds form privatizations," added Limbidis at a seminar on the pension system.

The official said the public pension system is registering a deficit already, but this is because over 30 percent of the companies are not paying their contributions.
The second pillar of the pension system (privately administrated pension funds) involves the transfer of a part of the current contribution from the public social insurance to a fund managed by specialized companies. As for the third pillar, it would mean everyone saving up to 15 percent of their taxable revenues to create a fund to be used after retirement.

Former Finance Minister Mihai Tanasescu stated that the implementation of private pension funds would require public resources of more than two billion euros per year. "If we want to continue reducing the social security contributions of employers while maintaining the budget deficit within the limits imposed by the EU we need to start thinking about a funding source," Tanasescu said.

Limbidis believes the draft law that regulates the second pillar of the pension scheme, currently under endorsement by various ministries, could be adopted by Parliament before the end of the year, so the law would become effective next year. The draft law regarding the third pillar has already been approved by both chambers of the Parliament.
The Chamber of Deputies also adopted the draft regarding the opt-in pensions. The project stipulates the expansion of the range of potential pension fund administrators to other categories of companies besides specialized firms. The adopted law also regulates the management mechanism of pension funds.

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The Trade company Electrocentrale Deva SA could be empowered to sign a foreign/domestic credit, approved by the government with a view to ensuring partially the financial resources necessary to undertake the project of rehabilitation of Unit 1 ? 210 MW in the Thermo-electrical power plant Mintia Deva, according to a draft emergency ordnance now under public debate. The payment for the foreign/domestic credit, interests, commissions and other costs could be ensured by Electrocentrale Deva SA, out of own funds, according to the specific terms and conditons of the credit contract. This credit is necessary to conclude the contract and to start rehabilitation works for Unit 1 CTE Mintia Deva, which cannot be delayed anymore, due to the large number of functioning hours, the expiry date of the equipment gurantee, worth 21.7 million dollars delivered from the Russian Federation and due to the fact that the period for the complition of the project is of three years.

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CarpatCement Holding launches the social programme « Bucharest breathes » through which a greenbelt will be planted in a nearby location ? Cornetu, Ilfov county, a press release of the company informs. This programme is developed with the Association of Environment Experts, the Agency for the Protection of the Environment Ilfov and the Regional Agency for Environment Protection Bucharest. The project started in 2005, by the identification of land appropriate for planting trees, the support from local authorities, study regarding trees and bushes adapted to the microclimate.

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The state incentives obtained by Automobile Dacia were within the legal limits, decided the Competition Council. Dacia is the only car producer in the local industry that benefited from state aid for large investment projects. The financial aid received by Dacia involves the exemption from the payment of the profit tax until December 31, 2006 and exemption from the payment of customs taxes and of the value-added tax for acquisitions meant for investments. The Competition Council found after investigations that the intensity of the state aid, calculated as a part of the incentive in the total value of eligible investments was 10.52%, therefore within the 15% limit provided by the law.

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The operator of the Central-European cafe network Coffeeheaven International has closed contracts for a number of locations in Romania. The first storefronts should open in 2007. According to a press release, the company would have opened several shops earlier but the difficult conditions on the Bucharest real estate market did not allow it. "A series of large commercial complexes are under construction which brings the level of rent in the vicinity of the main arteries to a level that we refuse to pay," said company representatives. Coffeeheaven has a network of 43 units in Poland, the Czech Republic and Latvia.

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Air Transportation Company Wizz Air will start its activity from the Transilvania Airport, located in Targu Mures, said the president of the Mures County Council, Lokodi Edita Emoke.
"Last year the company's representatives were interested to see if the area had potential and a week ago they wanted to talk with the presidents of the county councils that neighbor Mures County," stated Lokodi.
Wizz Air is a London-based company focused on low cost flights towards the Central and Eastern Europe.
The company operates through its Polish and Hungarian branches and has more than one million passengers each year.
Air flight companies Carpatair, Cimber Air, Tarom and Malev presently operate out of Transilvania Airport.

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Iranian authorities rejected on Tuesday Renault's proposal for an Iranian factory to export Logan components instead of assembled cars and also threatened they would halt the plan for production of the Megane model if an agreement is not be reached in the Logan issue. Teheran officials want 20 percent of Logan exports to be produced in Iran. The Iranian government had decided last week to suspend the project for Logan production in Iran in case the Renault Group does not accept the required terms. The main reason for which the French group does not want to export assembled vehicles from Iran, is that the country does not have commercial agreements with neighboring states, thus making the Logan more expensive due to large customs taxes.

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The Senate approved an ordinance that establishes the beginning of the summer tourist season on May 1 and its end on September 30 and forbids carrying out tourism activities on beaches without special authorization. Under the name of "beach operators," agents that administrate beaches would be given authorizations issued by the national public authority for tourism. According to the new ruling, beach operators will have to obtain all proper authorizations, maintain the beach equipment and assure the sanitary and environmental conditions of the beach. The ordinance also stipulates the only constructions that can be erected on the beach are toilets, first-aid centers and temporary structures.

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Trading company Niro Group projects a 25% rise in 2006 turnover, whereas the investments scheduled for 2006 amount to some 70 million euros and refer to the expansion of commercial area "Red Dragon", wrote Bursa daily, ACT Media news agency reports.

In 2005, Niro Group made investments of some 50 million euros, and the group's turnover stood at 17 million euros.

The investment programme for 2006 also has in view the finalization of the first four blocks of flats in residential area Chinatown Romania, the start of the works in the business area of this centre and the continuation of the works on residential complex Central Parc in Bucharest.

Moreover, the group started the works for renovation Hotel Boulevard, an investment of some 10 million euros.

The company, employing 1,200 people, has in its portfolio office building Nirocenter, the 10,000 sqm plot of land related to business centre Herastrau, industrial platform in Chiajna village, a production facility and an administrative building in Jilava village, Hotel Boulevard and other assets.

Niro Group cooperates with over 2,000 agents which unfold activity in commercial area Red Dragon and intends to expand also in other cities in Romania.

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The Romanian company signed yesterday a frame contract with Saab Aerostructures, one of the primary subcontractors of Airbus A380, for the production of subassemblies and components.
As part of Romaero's change of strategy, the Saab deal is a long-term contract with a ten-year duration. The value of the contract is difficult to estimate, said the president of Romaero's administration council, Aurel Cazacu, but it would not go below five million dollars in the next five to seven years. "As Romaero will prove its performance capacity, the contract could turn out to be without value limit," said the Romaero official, who is also head of the Defense Industry Department of the Ministry of Economy and Trade. Cazacu said that this contract was another proof that the Romanian aerospace industry is at an international level. "There is no model of Airbus, Boeing, Bombardier of Gulfstream that does not include components produced in Romania," argued Cazacu.
Romaero has previously concluded such arrangements with three other Airbus primary contractors and is currently in negotiations with a fourth one. Cazacu did not want to reveal their identity claiming that it could not be made public without their express agreement. He revealed, however, that the total value of contracts carried out with them was about four million dollars per year.

According to Cazacu, the Swedish group is interested in taking over Romaero and a Romanian delegation, headed by the Minister of Economy Codrut Seres, will travel to Sweden next week to continue talks that started one year ago in this respect. "Because of Romaero's cooperation with large companies, its taker will have to be an integrator, someone able to close contracts and maintain the 1,100 employees," said the official.
Additionally, the senior vice president of Saab International, Torbjorn Edberg, said the group waited for the issue of the task book within the next two months to form a clearer opinion about the likelihood of the acquisition. Asked about the possibility of Saab becoming the supplier of the Romanian fighter fleet, Edberg said the company has had a permanent dialogue with Romanian authorities since 1998. Saab hopes that the Romanian government will make an invitation to open negotiations as soon as it is prepared to do so, said the Swedish official.

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Erste Bank announced it will launch an offer for the purchase of the shares owned by the employees of the Romanian Commercial Bank. Erste offers either cash or the conversion of the BCR titles into Erste shares.

"Erste Bank is prepared to buy the employees' shares within the limit of a maximum number of shares, which would be established for 2006, 2007 and 2008," said Erste president Andreas Treichl in a letter sent to the employees of the Romanian Commercial Bank (BCR). Erste wants to issue the offer after it will take over the control of BCR.
"I am pleased to inform you that Erste Bank will prepare an offer for the purchase of employee shares after finalizing the acquisition of the main share package, probably in the third quarter of 2006" said Treichl.
The BCR employees bought an eight percent shares package in 2004, having paid 30 eurocents per share.
Erste paid 7.65 euros per share for the 61.88 percent share package in BCR.

The Austrian Bank showed that the price in cash will be smaller then the one offered for the main share package in BCR.
The calculation value offered for the conversion of the BCR titles into Erste Bank shares is of 7.65 euros per share.
The Erste titles were quoted at the Vienna Stock Exchange at 50.21 euros per share on Wednesday. The Romanian employees would receive 6.5 euros per share if the mentioned quotation would be used.
Treichl said that he believes there is a certain interest showed by the BCR employees in selling their shares because they should benefit from the opportunity of getting out of BCR's shareholders board before the bank's shares will be listed on the Bucharest Stock Exchange (BVB).

The Romanian employees would earn 22 times more than their initial investment if they sell their shares for seven euros.
Erste should become the owner of the BCR shares before the second semester of the current year.
Austrian based Erste won the tender for BCR's takeover at the end of 2005 and offered 3.75 billion euros for the 61.88 percent share package. Other BCR shareholders include the five financial investment companies (SIFs), which together hold a 30.12 percent stake. The Romanian party has yet to fulfill certain requirements in the contract, the most difficult one being the notice on the state aid granted to BCR at the time of its merger with Bancorex. The privatization contract stated that Erste does not have to guarantee the jobs of the present employees of BCR. Moreover, the Austrian investor has announced that it intends to reduce the total surface area of BCR's subsidiaries by 50 percent.

The contract stipulates that the BCR name will be kept for at least three years, but the authorities allowed the Austrian group to modify the bank's brand to show its affiliation to Erste. Another provision of the contract grants the minority shareholders the right to veto on decisions regarding mergers, liquidations, major sales of assets and capital increases.
The Austrian bank will create a Transition Consultation Council comprised of ten members who will have unrestricted access to internal and external information on the Romanian bank from December 22. Erste will appoint seven of the council's members, while other shareholders will name the rest.

According to the contract, Erste Bank must focus on increasing the market share for individual loans from 26 percent to 30 percent by 2010 and on keeping the bank's status as a leader on the Romanian banking market.
The costs allocated by Erste to integrate BCR into its activities should amount to approximately 90 million euros in 2006, while the expenses for the following three years could amount to as much as 100 million euros. The sums should be directed mainly towards the IT infrastructure and to the optimization of the subsidiaries.
The profitability rate of the BCR investment for Erste should be around ten percent beginning 2009, excluding financing costs. The average increase rate of the profits initially set to 15 percent for 2005-2008 will be increased to more than 20 percent for 2005 - 2009.

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Ziarul Financiar writes today about Porsche Romania's profit; some of the car dealer's officials say that one of the causes of their profit is the overall growth of the Romanian market. Porsche Romania, the biggest automobile importer on the domestic market, last year made more than 48 million euros in profit, an increase of 65 percent from the previous year, after having doubled the number of cars sold.
"The increase in profit was achieved through volume, as operating margins went down, pressured by the market. Profit increases can be made in two ways in the industry - either by boosting the business volume or by boosting efficiency, and last but not least, by optimizing costs," Brent Valmar, Porsche Romania general manager, told Ziarul Financiar. The turnover of the company overshot the 565 million-euro mark in 2005, an increase of more than 73 percent from the previous year, due to the boom of the imported car market.
Early in the year, company officials had estimated an approximately 380 million-euro turnover and an increase in the number of cars sold from 10 percent to 15 percent, in line with market forecasts. Imported cars, however, witnessed a growth in sales by 75 percent last year, with nearly every importer exceeding their sales targets set early in 2005.
"The main reason for Porsche Romania's growth resides with the overall growth of the market. Any potential new car buyer in Romania comes to us before they make the final decisions, most often comparing purchase alternatives," Valmar said.
The extra revenues generated by the flat tax and the appreciation of the domestic currency made cars more affordable and boosted demand for such products.
Seizing upon a favourable moment, the automotive importers carried out promotions throughout the year and put more money into advertising, which drove the pace of growth of the car sales up.
Another growth factor was, Valmar says, the service capacities. "We prepared and optimized all the necessary logistics along the way, for the supply with spare parts and accessories (the maximum delivery time per part is 3 days, service rate stands at 97 percent)," Valmar said. The service business is usually more profitable than the actual car sales business.

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The National Bank of Romania (BNR) approved a first set of regulations applicable to the non-banking financial institutions (IFN), i.e. three norms regarding the minimum capital of the non-banking financial institutions, regarding the General Registry, the Special Registry, and the Recording Registry, and the procedure of notification and registration in the books of the non-banking financial institutions, Nine o'Clock reports.

For the time being, the regulations focus on the procedure of publication in Monitorul Oficial of Romania, one of the most important provisions being to establish the capital of these IFNs at the equivalent of RON of EUR 0.2 M.

The capital increases of these entities can be operated through cash contributions and through the incorporation of the reserves constituted from the net profit, of the dividends from the net profit due to the shareholders after payment of the tax on dividends, and of the result carried forward which represents the net profit.

Some of the domains of activity of the IFNs are the granting of consumer, mortgage and real estate credits, micro-credits, the funding of the commercial transactions and factoring operations, leasing operations, the issuing of guarantees and the assuming of commitments, among which the guarantee of the credit, the granting to the members of not-for-profit associations receiving assets in custody, organised subject to the free consent of the employees/pensioners, with a view to supporting their members through financial loans.

On the other hand, the IFNs cannot issue bonds, except for the public offers addressed to the qualified investors.

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About 1,790 companies were registered in Jan-Feb '05, accounting for about 1.5 percent of the total, the subscribed social capital of these companies being of around nine billion lei, according to the National Statistics Institute, ACT Media news agency reports.

In February, the most active area from an economic viewpoint was Bucharest, ranking first with 391 registered companies, with a subscribed social capital of 521 million lei, accounting for 40 percent of the total.

The capital was followed by Timis county - 70 companies with subscribed capital worth 12 million lei, Cluj county - 44 registered companies with social capital worth 8 million lei and Brasov - 44 companies with subscribed social capital worth 60 million lei.

As many as 979 companies were registered nationwide in February.

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Alcatel Romania posted a 150 million EUR turnover last year, up by 15 percent compared to 2004. Some 50 percent of the amount derived from the sale of equipment and projects developed with mobile operators, while 25 percent came from public-private partnerships, Bursa reports.


The Company's officials estimate that sales will increase in Romania by at least 8 percent.

Alcatel Romania began activities in 1991 and is the main supplier of telecom equipment and solutions.

Within the past 15 years, the company's consolidated turnover was of 1.5 billion EUR.

Starting with this month, Alcatel Romania became the coordinator of the subsidiaries from 10 countries in South-Eastern Europe: countries from former Yugoslavia, Bulgaria, Cyprus, Greece, Albania.

Alcatel on the Romanian market is main supplier of communication networks for Romtelecom, Orange, RDS-RCS, CFR, Transelectrica and developed projects in the medical field.

The Alcatel University in Timisoara trained sme 16.700 people from Romania and Balkan countries between 1995-2005.

Internationally, Alcatel completed the merger with Lucent Tehnology last month and is now the second world producer of telecom.

Alcatel last year posted a turnover of 13.1 billion EUR.

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Top Brands Distribution, which distributes Philip Morris and Kraft products, plans to enlarge its portfolio of consumer goods suppliers, as well as to expand on the logistics segment.

The Romanian company, Italsofa, part of Natuzzi international group, one of the world's biggest producers of sofas, last year logged turnover worth 225 million RON (almost 63 million euros), an increase of 19% year-on-year. In euros, the rate of growth was even higher, 37% against 2004.

Wolfgang Porsche and Michael Piech, the main Porsche Holding shareholders, will be present at the official opening of the Porsche Bucharest West 1 auto complex, the general Porsche and Volkswagen importer in Romania. The investment in the 37,000 square meters auto complex amounts to eight million euros. The dealer will sell both Volkswagen and Skoda vehicles together with second hand vehicles. Porsche Bucuresti West 1 is the third dealer of Porsche Romania after Porsche Bucuresti Aviatiei and Porsche Bucuresti Nord. A new dealer will be opened July this year for the Audi and Seat brands. Total investments allocated for the sales infrastructure of the four dealers of Porsche Romania amount to 30 million euros. Porsche Romania was opened in 1998 and sold 1,000 vehicles in 2005.

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Romexterra registered a first quarter net profit of 2.45 million euros, a 77.1 percent increase compared to the same period last year. The bank consolidated its assets by about 29 million euros, to 330 million euros, 69 percent greater than in March last year. Loans for individuals jumped by 236.8 percent compared to March 2005, while net credits for companies were up 75 percent. Romexterra Bank holds a network of 41 branches and has announced plans to open 20 new locations by yearend. The bank closed 2005 with a net profit of approximately 5.7 million euros while assets amounted to 290 million euros, 54 percent more than in their 2004 financial statement.

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Raiffeisen Bank launched a personal needs loan which allows clients to refinance their consumer credits. The maximum amount for the Flexicredit Plus loan is 75,000 euros and the maturity was set at 20 years. The yearly interest is 9.5 percent for loans in euros and 10.5 percent for financing in dollars. Clients who choose to refinance their credits might benefit from the advantage of a single monthly payment and the possibility to opt for a loan larger than their initial credit, having access to the remaining amounts, explains Raiffeisen official Razvan Munteanu. The refinancing covers consumer loans, personal needs loans with or without collateral, car purchase loans, credit card debts and leasing.

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A Romanian investor will allocate six million euros for the construction of a 3,000 square meter office building in the Herastrau area of Bucharest, announced real estate company Rom International Service, the developer of the project. The construction works should be complete by May of 2007. The 1,040 square meter site is located near the Chinese Embassy and the construction will have five stories and 70 parking spaces. The price per square meter will be 2,000 euros. The developers did not reveal the identity of the investor.

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Two Cernavoda reactors are to become active.

Romania could become energy independent after the 3 and 4 reactors of the Cernavoda nuclear plant become active.
"With the 3 and 4 reactors from Cernavoda, together with the energy produced by the hydro-electric power plant and the coal-based plant, we could assure the country's energy independence," said the president of the National Commission for the Control of Nuclear Activity (CNCAN), Vilmos Zsombori.

The Cernavoda nuclear-electric power plant was designed to have five reactors working on Canadian technology of the CANDU (Canada Deuterium Uranium) type.
Each of the five reactors has a capacity of 700 MWe. The nuclear plant functions at the moment with a single reactor that assures more than 10 percent of Romania's national consumption of electric energy.
The second reactor is scheduled to become active in March 2007. After it begins functioning, the nuclear plant should supply approximately 18 percent of the nation's electricity.

The government allowed the Ministry of Public Finance to contract credits amounting to 217 million euros, needed for the finalization of the works to Unit 2 and the acquisition of heavy water (deuterium oxide).
The Ministry of Economy and Commerce (MEC) recently proposed to the government the 3 and 4 nuclear reactors to be constructed simultaneously. The sum required for their construction amounts to 2.2 billion euros.
The construction works for Unit 3 were scheduled to start this year and should be completed in 2012, at a cost of one billion euros.

Lucian Biro, a director at CNCAN, said that Romania should identify solutions for the disposal of used fuels coming from the nuclear plant's future units.
Romania holds a single dump for low and medium radioactive waste, located in Baita, Bihor County.
The storage capacity of the dump is 4.4 million liters of nuclear waste.
A similar dump of smaller proportions exists in Cernavoda and the waste is stored for a 60 year period.
"At the moment, the existing dumps of nuclear waste are not a threat, but Romania must find solutions for disposing of them," said Biro.

A mixed private project-based company will be created for the construction of the 3 and 4 reactors and several interested investors could give to the nominal capital.
The company Nuclearelectrica is set to be a stakeholder, as it currently operates the nuclear plant and will provide the land and the necessary facilities.
MEC will begin courting investors for the financing of works, which have been scheduled to commence at 76 months from the time the project company was initiated.

The annual operating costs for the three and four reactors are estimated at 100 million euros and the cost of energy produced should be about 30-35 euros per MWh, resulting in nine to 11 percent profitability.
After Romanian accession to the EU in 2007, the liberalization of the energy market will be completed and the national energy system will be connected to the European system. The Cernavoda nuclear plant will compete with energy producers that have production cost, productivity and nuclear safety performance indicators superior to current figures at Cernavoda. Ionel Bucur, division director of Cernavoda explains that the plant must become a competitive economic organization, continuously striving to improve its security standards. During negotiations with the Romanian party for the closure of the Energy Chapter EU, officials had reached the conclusion that they "believe nuclear energy to be one of the most viable energy solutions for Romania."

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Butan Gas Romania, the domestic branch of the Italian group Butan Gas posted a total profit of 4.03m RON (1.11 million euros), at the end of 2005 after having reporting losses of 2.43 million RON (0.7m euros) in 2004.

In 2005, the company turned to profitability, as there was a 14 percent increase in the gas sold, with the turnover rising 30% percent and the operating costs decreasing, said Florin Preda, Butan Gas Romania General Manager.

The turnover stood at 156.67 million RON (43.5 million euros) in 2005.

Butan Gas has only GPL operations in the Romanian market after having sold its petrol stations.

Shell made the strategic decision to withdraw from the petrol station market, by selling Shell Romania SRL business in two sections to Hungarian group MOL, for 72-73 million euros.

Butan Gas owns about 21 percent of the market and plans to raise its market share to 30 percent by the end of 2006, increase its turnover and expand the network of GPL stations to over 150.

The majority shareholder in the company is Butan Gas Spa Milano, with a stake of more than 90 percent.

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nvestments in IT technology in Romania via grants will reach about 9 million dollars after 2007, the secretary of state in the Ministry of Communications and IT, Aurel Netin said.


According to RomCard statistics, in June 2005, electronic trade registered the highest value in Romania, with 53,000 transactions and a total volume of 9.5 million dollars.

Last year, the value of transactions effected through banks and shops in Romania amounted to 65 million dollars.

At the same time, the value of transactions made through Visa cards rose by 160% as against 2004, reaching 12 million dollars. In Romania there are 7 billion cards and the rate of using a card is 2.4%.

According to the director for European operations of Dot Commerce, Madalin Matica, the value of transactions by means of Romanian electronic trade will double in 2006, up to 120 million dollars.

In his opinion, a rise of electronic trade may be determined by a higher involvement of accepting banks, better partnership with processors, lowering bank interest rates as well as a better collaboration among card issuing organizations.

The IT law in Romania has provisions about electronic trade, electronic signature, etc.

According to Netin, MCTI will implement a bill by which the payment of traffic tickets will be made by credit card.

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Some 4.565 million employees and 554,595 unemployed in Romania, with an unemployment rate of 6.3 percent at the end of February, according to data released by the National Statistics Institute, ACT Media news agency reports.

Of the total number of unemployed, 220,088 were women, the unemployment rate among them standing at 5.3 percent.

The higher unemployment rates were registered in counties of Hunedoara - 10.3 percent (22,410 unemployed), Ialomita - 9.4 percent (13,184), Gorj - 9.1 percent (16,339 unemployed), Harghita - 8.2 percent (13,588 unemployed) and the lowest unemployment rates were registered in the counties of Bihor - 2.3 percent (8,707 unemployed), Timis - 2.4 percent (7,939), Ilfov - 2.5 percent (2,786 unemployed, of which 1,379 women), Vrancea - 2.9 percent (6,572 unemployed, of which 2,237 women) and Bucharest - 3.1 percent (23,264 unemployed, of which 12,505 women).

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Socata, a subsidiary of the European Aeronautic Defense and Space Company (EADS) could collaborate with Eurocopter Romania and IAR Ghimbav for the construction of two aircraft models.

The three partners could produce the piston-engine aircraft models TB 20 and TB21 with a capacity of 4 to 5 seats, according to Flight Global online. A third version, currently known only as TB2X, to be powered by an SMA diesel-cycle engine could also be produced in Romania.

IAR Ghimbav director Ioan Georgescu said the parties involved in the project were discussing the partnership but no final terms were established at this point. He added that, in the case of an agreement, IAR Ghimbav would take charge of the production of subsystems, Eurocopter Romania of the assembling and Socata of marketing. The latter would also take charge of the preparation of the fabrication process, which involves the supply of specific equipment for the production of aircraft parts.

Socata General Aviation Vice-president Jacques Lordon, quoted by Flight Global, said the group was in talks with the Romanian government and hoped to have an agreement in place this year. Lordon added that the target for first aircraft deliveries was 2007.
Production of the range of piston-engine aircraft now takes place at Tarbes in south-west Francean and is performed on specific orders. Georgescu said Socata was relocating less important projects in order to be able to focus on its main activities.

Socata marketing vice-president Andrew Knott says there could be a market for as many as 100 aircrafts a year. He predicts that the aircraft's customer base would mirror that of the company's turboprop line, with around 80 percent of sales in the United Sates and the rest in European, Middle Eastern countries and China. Over 400 planes could be produced between 2007 and 2012, at a price ranging between 350,000 and 370,000 $US, according to the IAR Ghimbav president. "These planes could be adapted for the surveillance of oil pipelines and power lines," said Georgescu.
IAR Ghimbav is already collaborating with Eurocopter, also an EADS division, the two companies having set up a joint venture in which EADS holds a 51 percent participation.
Romanian authorities intend to privatize the local plane manufacturer and officials have had talks with representatives of Eurocopter and EADS.

In 1997, after the withdrawal of fabrication licenses for the PUMA and Alouette helicopter models, IAR Ghimbav had serious problems regarding exports. As the privatization failed, the solution of the authorities was the association with a renowned company, namely Eurocopter.
In the last three years, the Ghimbav-based factory obtained profit and has confirmed the existence of firm orders for both the internal and external markets until 2009.
Prime Minister Calin Popescu Tariceanu stated in mid-March during the discussions with the French-German group, that Romanian authorities were interested in finding a partner for the privatization of IAR Ghimbav, as a way of insuring the economic development of the company.

On the same occasion, Tariceanu demanded EADS to deliver, on deadline, frontier security equipment that Romania needs in order to comply with EU accession pledges. According to a 650 million euros contract signed in 2004 under Social-Democrat administration, EADS should install an on-line IT system for all the operative locations of the Customs Police and an integrated communications system, which will eventually be the back-up of the Integrated Border Surveillance System (SISF), by the end of 2006. The contract also included an option to subcontract works worth 350 million euros.
Politicians and EU experts fiercely criticized the contract, considering its value to be too high and, more importantly, some of its provisions imposed on EU funded programs. In February 2005, the new government announced the contract would be renegotiated to avoid conflicts with European programs.
After renegotiations, the Minister of Administration and Interior Vasile Blaga stated that the contract's value decreased by 125.5 million euros, due to eliminating provisions which conflicted with EU programs.

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Mines will be able to receive state aid even after January 1, 2007 if they manage to pay all their bills and if no more losses are registered. EU officials accepted the measure during the latest negotiations with the representatives of the Ministry of Economy and Trade (MEC), according to sources close to the talks.
Romania and the European authorities had established initially that no state aid was going to be allowed after January 1, 2007. MEC officials met this month with the representatives of the Competition Department of the EU to establish the conditions under which the mining sector could benefit from state aid after Romania's entry in the single market. After negotiations European officials accepted that state aid be granted to Romanian mines after accession, on the conditions that they present a realistic restructuring program.

The state incentive would be granted exclusively for investment and modernization programs.
Last week, the government announced the initiation of a program for the alleviation of the mine restructuring impact as over 11,000 employees out of the 48,500 still working in the mining industry would be laid off this year. The measure was justified by the authorities as an attempt to prepare for the halt of subventions to the mining sector by 2007. Only economically viable companies would remain active, said the State Secretary for the coordination of economic activities Gheorghe Pogea. 200 million euros were allocated to infrastructure and regional development projects in order to turn 20 former mining areas into investors-attractive zones.

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Foreigners withdrew 30 million euros more in March than they put into brokerage accounts, so that net capital outflows reached a new record-high, Ziarul Financiar writes.
Capital inflows from non-residents amounted to 34.3 million euros in March, more than three times lower than in February and less than half of January's level.

Net foreign capital outflows reached 63.17 million euros last year, slightly lower than in the first two months of the year.
Last month witnessed the exit of a legal entity investor for the first time this year. However, 17 other such investors have come into the market, taking the total number of foreign legal entities to have opened accounts with brokers in Romania since the beginning of the year to 53.

The data includes accounts opened by investors, so that if an investor opens several accounts, it is registered for every single one of them. Foreigners put in 235.6 million euros and withdrew 207.5 million euros from the accounts of the brokers in the first quarter. Three months into last year, net foreign capital inflows had been surpassed by withdrawals, with foreign investors withdrawing 1.7 million euros more than they had spent from their brokerage accounts.
"There is an interest in the Romanian capital market on the behalf of certain foreign institutional investors, which are small and medium-sized investment funds that have inflows, which vary from month to month, depending on the market conditions. The real inflows from the big investors have yet to come," says Dana-Mirela Ionescu, chairperson of the Raiffeisen Capital & Investment brokerage company.

"The big investors have not really made their presence felt on the market thus far, this is mainly due to differences in the clearing system and the rules regarding the nominee account (on the capital market, this is the account the broker opens, and customers subsequently become sub-accounts of this account) on our market compared with the developed markets. Once these rules are brought in line with those of the foreign markets, big investment funds will start entering the Romanian stock exchange," Ionescu added.

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?The new Oversight Council of the Proprietatea Fund (CSFP) will not be appointed on political algorithm criteria. It will be managed by some competent expert from the National Bank of Romania (BNR) and will include experts in the banking field,? said Premier Tariceanu, Nine o'Clock reports.


Tariceanu said that the current president of the Council, Nicolae Ivan, reacted in a dissatisfactory way to the attacks against the Fund, for which he blames the ?speculators and the opposition.?

The partners in the ruling coalition, the Democrats namely, were also the target of Tariceanu?s criticism, who called them ?whiners?.

The PM told daily ?Cotidianul? that in the wake of the Easter holiday, on Tuesday most likely, the membership of the Oversight Body of the Proprietatea Fund will be ?replaced in proportion of 100 per cent or almost.?

According to sources with the Central Bank, Nicolae Cinteza, the head of the Banking Oversight Department, is tipped to be the most likely choice for head of the Council.

Premier Tariceanu explained he had reached the decision to operate the changes as ?originally, only the Liberals had been appointed to the council, and, I would like, among others, to also shut the mouth of all the whiners.?

Speaking of those who contested the setting up of the Fund, Tariceanu said:

?In the first place, those who blame certain articles in the law regulating the organisation and operation of the Fund had to do it in June-July of 2005, when the entire Proprietatea legislative package had been up for public debate?.

He further said that the attacks began a month ago, namely before the Fund is listed on the stock exchange, which proves there are some big stakes at play here.

?There are people interested to make the holders of shareholding certificates (former owners to receive compensations through the Proprietatea Fund) lose faith in the institution, in order to buy the certificates from them at a low price.

Later on, the buyers will strike it rich without a sweat. On the other hand, the Fund is also under attack by the Opposition, since it has no interest for the ruling power to receive a white ball,? Tariceanu also said.

Members of the Social Democratic and Greater Romania Parties - PSD and PRM ? and those of the Jewish minority in the Chamber of Deputies economic Commission last week issued a negative report to the Ordinance on the privatisation strategy of the National Lottery and the National Printing House, which stipulated, among others, for 20 per cent of the stock of the two institutions being transferred to the Proprietatea Fund.

It is not only the ?speculators and the opposition? that pointed their finger at the Fund, but also the partners in the ruling coalition.

The Democrats criticised mainly the Liberals? failure to consult them over the appointment of the Oversight Council, while the objections raised by the Conservative Party dealt mainly with the state companies subordinated to it.

The main reasons for criticism at the Fund regarded both the exclusively Liberal membership of the Council but also the shady past of some of its members.

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The deficit of trade exchanges between Romania and the European Union states, for the first two months of 2006 was 461,9 million euros, according to the data released by the National Institute for Statistics, ACT Media news agency reports.


FOB exports registered, in January and February 2,680 billion euros, up with 16.6 percent against last year, and CIF imports 3,142 billion euros up with 22,6 percent against 2005, during the same period.

The largest amount of exports was delivered to Italy, namely 735,1 million euros and Germany, 598,5 million euros, and the lowest level was covered by exports to Estonia, Latvia and Luxembourg, respectively 0,6 million euros each. The most substantial imports were made from Italy, 753,1 billion euros and from Germany 736.7 million euros.

The lowest level of imports was registered with Malta, 0,4 million euros, Latvia, 0.5 million euros and Estonia, 0.6 million euros. The most important growth in exports was registered with Slovenia, 217, 1 percentage points, and the most important decrease was with Luxembourg, 52,1 percent.

As regards imports, the most important growth was with Latvia, 113,1 percent respectively, and the most important decrease was with Malta, 49,8 percentage points. Exports to the European Free Trade Association (EFTA) made up of Switzerland, Iceland, Lichtestein and Norway registered, for the first two months, 51,3 million euros, with 109,3 percent more than the same period last year.

Imports from EFTA registered over January and February, 62,3 million euros, up by 7 percent against the first two months of 2005. Exports to Turkey covered during January ? February 2006 265,8 million euros, 8 percentage points more than last year, while imports from the Russian Federation were of 583.7 million euros, 84.2 percent more than during the first two months of last year. CIF price (cost, insurance, freight) is the goods price, made up of cost, insurance and freight (tax for use of transport shipping) the price at the border of the importing country covering both FOB price and insurance and shipping. FOB price (free on board) is the price of the goods at the border of the exporting country, including the value of the goods, all shipping expenses to the embarking point, as well as all tarrifs for the goods to be loaded.

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BRD- Groupe Societe Generale will distribute approximately 62 million euros in gross dividends, accounting for 39 percent of the profits registered by the bank last year. Each shareholder is to receive a gross dividend of 0.3089 lei per share, compared with 0.1257 lei in 2004. The nominal value of a BRD share was 0.5 lei in 2004, while the current value is one leu. The bank closed 2005 with a net profit of 160 million euros, which will mainly go to the banking risk reserve and shareholders as dividends. BRD- GSG is the second largest bank operating in Romania, with 5.7 billion euros in assets at the end of 2005.

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The revenues of real estate developer Impact Bucharest increased last year by 48.5 percent over the level of 2004 to 48.5 million euros. Additionally, Impact's gross profit diminished by 42 percent to 3.77 million euros, according to data the company submitted to the Bucharest Stock Exchange (BVB). The data is part of the audited financial results that Impact will present today to its shareholders. These are less encouraging results than the estimations presented in mid-February when Impact announced it hoped to obtain total revenues of 51.7 million euros and a gross profit of 4.57 million euros.
In 2004, the company reported a turnover of 31.32 million euros and a net profit of 5.41 million euros.
Most of the revenues obtained last year came from building sales, according to the report. The company also reported assets worth 85.18 million euros, 24.4 million euros of which is the sum value of land plots intended for the company's future real estate developments. Impact's assets also include dwellings under construction and the office building Construdava which the company plans to sell as soon as possible.

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Austrian petroleum group OMV is making a 3 billion euro profit on paper from the takeover of the biggest Romanian company, Petrom, less than two years ago, Ziarul Financiar writes.
The Austrians will collect their first profit this year, if the General Meeting of Shareholders approves dividend disbursement today.
OMV is supposed to collect more than 100 million euros if the proposal of the company's management on dividends gets through.
The majority stake owned by the Austrians is worth some 4.3 billion euros at the moment, while they paid 1.5 billion euros for it.
During the General Meeting of Shareholders that is to take place today, the Petrom shareholders are to discuss approving the distribution of dividends worth 212 million euros (738.4 million RON), half of which should go to the majority shareholder, OMV. The dividend per share proposed by the management stands at 0.013 RON.
Petrom granted dividends only in one of the last three years, but even then the dividend value was five times lower than distributed this year.

The managers resorted to an accounting trick last year in order to grant dividends, covering the losses made in the previous years, 800 million euros, using the issue premiums for the share issue related to the privatization of the company and the reassessment reserves. The losses a company makes are usually covered from the profits in the following financial years.
The Austrian group has collected 234 million euros from Petrom since taking it over, in a deal whereby Petrom acquired OMV's operations in the region.

Petrom bought OMV's filling stations in Romania, Bulgaria, Serbia and Montenegro early this year, which adds 178 stations to the approximately 600 self-branded Petrom stations in Romania.
Petrom bought from OMV 99.9 percent in the following subsidiaries of the Austrian group: OMV Mineraloel Romania, OMV Bulgaria EOOD and OMV Yugoslavia, thus taking over 73 petrol stations in Romania, 74 in Bulgaria and 31 in the former Yugoslavia.
The Austrians agreed in the summer of 2004 to pay some 1.5 billion euros for the controlling interests in Petrom.

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Omnilogic for 2005 posted overall revenues of 162.3 million USD, which is 35 percent higher compared to 2004. Some 112 million USD of this amount came from the distribution of hardware and software which addressed the small and medium sized enterprises and the difference was given by local and regional projects, which are financed by external partners or direct sales through the finance-banking sector.

The company's sales were completed 90 percent via the traditional hardware and software distributors, of which IBM, HP and Cisco Systems stood out. Gabriel Marin, Managing Director of OMNILOGIC, said: "We have to admit that the strengthening of the national currency in 2005 had a favorable influence on the profitability of IT&C businesses as most of the products are imported.

"Feedback from our local partners confirmed the fact that the added value distribution area has significantly increased compared to 2004. The traditional IT&C market did not exceed values of 600-650 million USD. Practically speaking, Omnilogic and its partners took over market segments that belonged to less competitive companies in the same sector."

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French diary producer involves in the development of family farms, established after European models. The company enhances farmers access to loans and provides technical and management consulting for investments.

Starting with April 2005, the company initiated the "Spre Vest" program, which aims at increasing the milk production by the purchase of more cows that have increased genetic potential and improve the quality of milk by investments in new equipment.

The Dragoesti farm in Mariuta village, Ialomita county, has initiated a collaboration with Danone in 2001 and since then it increased the production capacity from 140 liters per day to 1,500 liters per day.

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French group FLASH CONSULT INVEST signed the partnership contract with the Romanian supermarket chain UNIVERS'ALL, which will open a store within the first Euromall in Romania, which is located at Pitesti. UNIVERS'ALL is the brand for the first 100 percent Romanian owned supermarket chain.

Univers'all will be located on the ground floor and will cover 2,100 sqm. The official opening of Eroamall Pitesti is scheduled for February 2007. At present, the construction work is underway but in the meantime the company leased 60 percent in the overall surface.

FLASH CONSULT INVEST is a French company, which was established by a group of investors that operate 27 retail centers in France. The operative management is provided by experienced professionals, with expertise in finding finances and completing such a project.

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EADS Socata is planning to transfer production of its TB20 and TB21 piston-engine aircraft to Romania and revamp the product line with the addition of a third variant ? currently known only as TB2X ? to be powered by an SMA diesel-cycle engine.

Socata is in talks with the Romanian government and hopes to have an agreement in place this year, says the group?s vice-president general aviation, Jacques Lordon, adding that the target for first aircraft deliveries is 2007.

Socata would subcontract work to Eurocopter Romania, which would share the production with its Romanian state-owned partner IAR at its Brasov site.

Production of the range of piston-engine aircraft ? principally the TB20 and TB21 types with retractable gears ? now takes place at Tarbes in south-west France, and is only in response to specifi c orders.

Socata?s vice-president of marketing Andrew Knott says there could be a market for as many as 100 of the revamped aircraft a year. He adds that other improvements would probably include an avionics upgrade. He predicts that the aircraft?s customer base would mirror that of the company?s turboprop line, with around 80% of sales in the USA.

The company is meanwhile aiming to produce 42 of its new TBM850 turboprops (pictured below) this year and has 36 orders in place for the aircraft, four of which have already been delivered. ?We?re confident we?ll meet the target of 42 aircraft this year and take orders for next year,? says president and chief executive Stéphane Mayer.

© French Frogs AirSlides

Production rates are increasing to four a month to achieve this target, but maximum capacity for production of the aircraft could eventually reach 70 a year. Socata is aiming to expand its geographical reach with the new aircraft, targeting South America and the Asia-Pacific region in particular.

Production is expected to increase by at least another 50% next year, Knott says.

Mayer says Socata will decide later on the TBM700?s future. This year all production capacity will be taken up by the new aircraft.

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BCR Asset Management holds the first position on the open investment funds market, with a market share exceeding 20 percent, reads a release on Friday. According to the National Union of the Collective Investment Bodies (UNOPC), BCR Asset Management managed assets worth 93 million lei late in March, out of a total 459.8 million lei representing the total assets on the open investment funds market, ACT Media news agency reports.


"BCR Asset Management is currently the leader on the market, the same as the BCR takes the first position in the Romanian banking system.

It is an honor for us but also an obligation if we are taking into account the fact that this industry is expanding at a fast pace, with the volume of the assets being by 20 percent higher as compared with the beginning of the year.

The market is relatively concentrated, with the first six management companies covering more than 80 percent of the market, but also competitive, with six new funds being authorized since the beginning of the year," BCR Asset Management general manager Doru Tiberiu explained.

BCR Clasic (classic) and BCR Dinamic (dynamic) are among the most profitable investment funds within their category, with the BCR Clasic recording an increase by 9.2 percent on the Fixed Income Instrument Funds segment and BCR Dinamic by 25 percent on the Diversified Investment Funds segment.

Recently, BCR Dinamic was given a prize for the best performance in the "diversified funds" category. BCR Asset Management offers services to administrate the individual accounts for the natural or juridical persons disposed to invest large amounts of money of 1 billion lei.

This service is personalized, with each customer being offered an optimum solution depending on its both appetite and capacity to take the risk. SAI BCR Asset Management SA, a member of the BCR Group was set up in April 2002 as a corporation running on a 5 billion lei share capital, subscribed and paid in according to the regulations of Law No. 31 / 1990 republished and has as main object of activity the management of the open investment funds.

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Nearly 56 000 Bulgarian and Romanian workers are expected to migrate to the UK next year, a report of the Institute for Public Policy Research (IPPR) shows.

After the two countries join the EU, the number of workers looking for job opportunities in West European countries would increase. Nearly 41 000 Romanians and 15 000 Bulgarians will migrate to the UK in the first year after EU accession, the report predicts.

More workers from the two countries are also expected to travel to Italy, Spain and Greece because of the proximity of these countries to Southeastern Europe.

The UK government should enable the access of these workers to the UK labour market, the IPPR report recommends. This development would have positive impact on the labour market and foreign labourers would contribute to the national economic development.

Migration is also likely to affect positively the economies of Romania and Bulgaria, as well.

IPPR associate director Danny Sriskandarajah said Bulgaria and Romania's EU accession should be seen as an opportunity rather than as threat.

According to IPPR statistics 5350 Bulgarians and 7500 Romanians work in the UK at present. The numbers are higher for Spain, Italy and Greece.

The International Monetary Fund (IMF) stated in its latest mid-year report that economic growth in Romania will be 5.2 percent in 2006 and will rise next year to 5.6 percent. However, the increase this year is inferior to the 6 percent target announced by the Romanian authorities. The IMF showed that the average inflation will be 7.9 percent in 2006 and 4.8 per cent in 2007, ACT Media news agency reports.


According to the recent statements of central bank governor Mugur Isarescu, the inflation target estimated for this year is 5 percent, with a margin of +/- 1 percent.

Nevertheless, Isarescu expects a deviation of 0.5 percent above the higher limit of the margin, so that inflation is likely to reach 6.5 per cent. "We have decided to maintain the inflation targets for 2006 and 2007; thus the inflation target for 2006 stays at 5 percent with a margin of +/- 1 per cent," said the central bank governor during the presentation of the latest report on inflation.

The current account deficit will be 8.3 percent of the Gross Domestic Product (GDP) this year, and will be reduced to 8.1 percent in 2007, according to IMF estimations. According to forecasts by the National Forecast Commission for 2006, the current account deficit will reduce by 0.2 percent of the GDP, reaching 8.5 percent. "In Bulgaria and Romania, the domestic demand exceeded expectations, following the steep increase of the credits, salaries, the tax cutback - operated in Romania as of January 2005, as well the increase in investments.

Thus, inflation pressures intensified in Romania, in spite of the appreciation of the national currency RON," reads the IMF report. The IMF experts consider that the foreign deficits in the two states are generated by the private sector and represent a high source of vulnerability, which stresses the necessity of reducing the advance of credits, especially of consumer credits, according to the Fund's experts. In its bi-annual report, IMF warns Romania about the need to restrict wage increases.

The international organisation also highlights the need to implement structural reforms, to stimulate the offer, to render the labour market more flexible and step up the privatisation process.

Both the economic growth and the increase of consumption prices in Romania will be this year above the average registered by the South-Eastern European states. The release of the IMF's "World Economic Outlook Report" coincides with the presence of the Romanian Finance Minister Sebastian Vladescu at the spring meeting of the Fund in Washington.

On this occasion, he will hold talks with the Fund's representatives related to the extension of the precautionary-type agreement.

The talks will focus on the points of divergence regarding the budget deficit targets, as well as to the macroeconomic indicators presented in the IMF report.

"I hope that the meetings we will have with the IMF representatives in April will allow us to continue the precautionary-type agreement," Minister Vladescu stated recently in a news release from the Ministry of Public Finance.

The budget deficit was the critical aspect of the previous talks with the Fund's officials and the Romanian Government has decided, once the budget adjustment was approved, the that the budget deficit should rise from 0.4 percent to 0.9 percent of the GDP.

"I hope that, following the consultations between FinMin experts with government representatives, and between the IMF mission with the Board of this international financial institution, the differences related to the budget deficit targeted in 2006 and 2007 will be lessened," Sebastian Vladescu stated in March.

Minister Vladescu's talks with the IMF officials in March in Washington showed that, although the two parties have common concerns, they have not yet come to terms.

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The current account of the balance of payments registered in the first two months of 2006 a ¤1.01 bln deficit, accounting for an 80.5 per cent increase as compared to the corresponding period of last year, mainly resulting of a high deficit of the trade balance, announced the National Bank of Romania (BNR), Nine o'Clock reports.

The balance of payments deficit was covered (98.2 per cent) by foreign investments, which doubled to EUR 1 Bln in the period under analysis.

The deficit of commodity exchanges amounted to EUR 997 M, as opposed to EUR 587 M in January-February 2005.

As for the service trade, the deficit decreased from EUR 58 mn to EUR 51 mn worth mentioning is the decrease in the surplus reported for the current transfer component, from EUR 488 mn to EUR 469 mn.

In the structure of services, tourism went from a EUR 10 M surplus in the first two months of 2005 to a EUR 26 M in the first months of this year.

A positive evolution was nonetheless reported for transport services, where the deficit decreased from EUR 38 M to EUR 24 M.

On the other hand, the deficit in the income component deepened, from EUR 407 M to EUR 439 M.

The medium and long-term foreign debt, in late February, was EUR 24.556 Bln, up 0.3 per cent as compared to December 31, 2005.

The contribution of the governmental and publicly guaranteed debt in the total decreased from 46.2 per cent in December 2005 to 46 per cent, accounting for EUR 11.304 Bln.

According to the National Statistics Institute, the deficit in trade exchanges between Romania and European Union member states in the first two months of the year reached EUR 461.9 M.

FOB exports amounted in January and February to EUR 2.680 Bln, up 16.6 per cent as compared to last year, while CIF imports reached EUR 3.142 Bln, i.e. 22.6 per cent more than in the corresponding period of 2005.

Most exports were conducted towards Italy (EUR 735.1 M) and Germany (EUR 598.5 M), with exports to Estonia, Latvia and Luxembourg reporting the smallest volume, of EUR 0.6 M each.

The most substantial imports came from Italy (EUR 753.1 M) and Germany (EUR 736.7 M).

The lowest values were reported for imports from Malta (EUR 0.4 M), Latvia (EUR 0.5 M) and Estonia (EUR 0.6 M).

The highest export increase was noticed in Romania?s exchanges with Slovenia (by 217.1 per cent), while the highest export decrease was reported in relations with Luxembourg (by 52.1 per cent).

As for imports, the highest increase was registered in trade relations with Latvia (113.1 per cent) and the highest decrease ? with Malta (49.8 per cent).

Exports to the European Free Trade Association, which includes Switzerland, Island, Liechtenstein and Norway, amounted in the first two months of the year to EUR 51.3 M, i.e. 109.3 per cent more than in the corresponding period of last year.

Imports in trade exchanges with EFTA reached EUR 62.3 M, up seven per cent as compared to the first two months of 2005.

Also, exports to Turkey amounted, in January 1-February 28, 2006, to EUR 265.8 M, eight per cent more than last year, while imports from the Russian Federation increased by 84.2 per cent, to EUR 583.7 M.

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Cosmote Romania, a member of the Greek group Cosmote and Internity, the IT& C distribution chain of the French group Avenir Telecom, concluded a strategic partnership in which Internity will distribute Cosmote products and services in its shops, officials of the two companies said, ACT Media news agency reports.


?One of the main arguments for which the partnership was concluded is the extensive network of Internity shops?, according to Sales Customer Care director, Cosmote Romania, Vassilios Trochalidis.

The network includes 64 stores in Romania, of which 16 in Bucharest.

Until the end of 2006, company officials intend to expand the 80 shop network to 100 stores, until the end of 2007.

At the same time, Internity, a member of the group Avenir Telecom, is interested in distributing Cosmote products for a better visibility in the market and because it has now the possibility to sell competent and performing products, Trochalidis said.

The partnership has an exclusive character, an Avenir strategy in the eastern part of Europe, William Kuillet, international director Avenir Telecom said.

Two Cosmote packages were launched on the occasion ? Kill Deal, for prepaid and postpaid segments.

The postpaid segment includes the Motorola C261 phone and a monthly subscription with 60 minutes included.

The prepaid package includes the Nokia 1110 phone and a 5 euro Cosmote card with a credit of 10 euros.

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Businessman Ion Tiriac, believed to be the richest Romanian, is planning to invest EUR 500 M in the property market over the next four years, reported the Ziarul Financiar daily.

The investments will be poured in luxury residential complexes in the Baneasa Forest, Class A office buildings and commercial projects, as well as in the expansion of the auto showroom network of his group.

"The Tiriac group of companies will develop real estate projects worth approximately EUR 500 M over the next four years. Real estate is now Tiriac group's strategic development direction," Anca Ioan, CEO of Tiriac Holdings, told Ziarul Financiar.

Romania, together with neighbouring Bulgaria, are hotspots for property investors, who are lured by yields that are comparatively higher compared to other markets.

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Belgian House of Representatives ratified Friday Bulgaria and Romania?s EU accession treaty, the press office of the Bulgarian Foreign Ministry announced.
The Belgian MPs voted 115 -14 with one abstention to back the two countries? accession. All members of the Flemish extreme nationalists from Vlaams Belang were against the ratification.
In 2004 the MPs from Vlaams Belang did not back the EU accession of the ten new countries.

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Romania's National Post Service (CNPR) reported a 2005 gross profit of some 14 million euros, up more than 230 percent from 2004, weekly publication Saptamana financiara informed in its latest issue. The Post Service management targets a business turnover of some 850 million RON (some 242.8 million euros) in 2006, up some 100 million RON from the year before, on total investments in excess of 20 million euros, ACT Media news agency reports.


With a staff of 34,000, the company provides services to 21.6 million people, with some 300 million mail items delivered to 7.5 million addresses a year.

"As far back as last year we started off a sweeping process of modernisation and efficiency increase, all that led to the surge in profits.

The process is now in full swing, entailing introducing new, modern and efficient services, cutting costs and renegotiating contracts in an attempt to increase the company's value ahead of its privatisation," said Minister of Communications and Information Technology Zsolt Nagy.

The company has been working for a long time with Bancpost, for which it performs school allowance payments as well as money depositing and withdrawal on savings books.

In 2005, it concluded a partnership contract with Citibank for awarding the bank's personal loans and cashing in the loan instalments; with Finansbank for the cashing in of instalments due on consumer loans issued by Altex electronics retail trader, as well as with Omniasig insurance company for the trade of Omniasig home insurance and mandatory auto insurance policies.

Also in 2005, CNPR and Raiffeisen developed an on-line utility charge payment system and concluded a contract with CitiFinancial whereby CNPR issues and pay loans extended by CitiFinancial.

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The Korean-owned Daewoo Craiova factory won a contract on Friday with a Ukrainian plant for manufacturing 20,000 engines and gearboxes. The value of the deal was not disclosed but the vice-president of Daewoo Automobile Romania, Ion Ion, said it was tens of millions of euros.

Niro Group, the company developing the China Town project, estimates that the entire investment required will amount to EUR 200 million. ?For construction work up to now, we have spent around EUR 100 million,? Florin Suicescu, executive manager of Niro Group, said.

News broke last week about a Bacau-based textiles company hiring 1,000 Chinese workers for its factory. The Italian Sonoma company, which works in Bucharest as well as in Bacau, was said to have asked for 1,000 work permits for Chinese workers from the Bacau Agency for Workforce Migration.

The industry is a magnet for foreign investors shows the data with the Trade Register Office. Foreign investments above 1 million euros totaled 1.73 billion euros in 2005, representing 33.4 percent of all investments, and 65 percent of foreign investments registered as capital increase in the Trade Register Office.

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According to figures supllied by the National Statistics Institute, at the end of February there were as many as 4.565 million employees and 554,595 unemployed in Romania, with an unemployment rate of 6.3 percent .

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The European Personnel Selection Office (EPSO) is recruiting 51 Romanian legal experts for positions at European Union institutions, writes Ziarul Financiar today.

Applicants are wanted for lawyer linguist positions, which pay monthly salaries starting at 5,000 euros. According to the advertisement posted by EPSO, candidates may apply for either of the two channels: the Court of Justice (35 vacancies) or the Parliament, Council, Commission (16 vacancies).
"It is a custom, an unwritten rule that every member state should have a number of civil servants with the EU institutions, which is proportionate with the population of each state in general," said Leonard Orban, state secretary with the European Integration Ministry.
He said that the number of civil servants, either low or high-ranking, which Romania could have in the Parliament, Council, Commission and other European institutions, might number in the hundreds in two or three years.
According to the state secretary, despite the very rigorous demands, competition for such positions is quite fierce. Therefore he estimates about 100 people are competing for each position. However, even though the number of applicants is high, there are no guarantees that applicants will meet the level of competence expected for these positions.
"There are problems with filling the positions, especially those for high-ranking civil servants, which require a great deal of training. Salaries are good, but demands are really high," Orban said.
He added recruitment was currently targeting temporary positions (two-year contracts), because this was a much more comfortable solution than recruitment for permanent positions. The new positions require candidates to have an education that corresponds to at least four years of university education and a graduation degree in Romanian law.
They will have to have the capacity to translate and proofread legislative and judicial texts, to the language of the contest, from at least two other languages than Romanian.
Language skills required are different for each of the two posts.

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Ten office buildings transactions were signed in 2005, the largest number so far. The 150,000 hectares Bucharest Industrial Park, stirred the interest of many developers.
Colliers estimates that the class B office space market will gain ground this year, as several projects should be completed this year in the Pipera and Polytechnic University areas. "The B class office space market will be the rising star of 2006, keeping with the trend which began at the end of 2005, when a portfolio of six office buildings had been sold to a Greek investor", Colliers analysts estimate. The word that would best describe the market in 2006 is diversity, due to the different nationality of investors, size of funds penetrating the market and the variety of objectives targeted by real estate companies, Colliers explains. As class A projects are more scarce, even the most prudent investment funds will explore other types of products, such as B class or Brownfield (development of existing structures) projects. Investor interest will shift towards small cities and client-commissioned projects. 

Austrian investors were the most active, buying four of the largest real estate projects. British and Irish investors also closed important deals, focusing on projects of up to 10,000 square meters. Two of the most important projects on the market changed owners in 2005: Bucharest Business Park, developed by Portland Trust and sold to Austrian investment fund CA Immo and Raiffeisen Evolution Floreasca Tower, also known as Oracle Tower, purchased by the real estate investment division of Uniqa, another Austrian investor. Neocity I, II, Cascade and Bucharest Corporate Center are among the other important transactions of 2006.

Several investment funds are interested in developing, in a partnership with Universal Property, real estate projects within the Bucharest Industrial Park in the west of the capital, on a 160 hectares site, in the area of the highway route to Pitesti. Future deals will be joint-venture partnerships for segments of the site. Logistics and light industry investors have shown the most interest, said Universal Property Director Liviu Hagea. An investment company controlled by Romanian businessman Nicolae Ratiu is the majority shareholder of Universal Property. The company is also considering directly selling lots, after they have closed two such transactions in 2005. For example, Dutch Group Rynart bought a 17.5 hectares property in the Bucharest Property Park, where it plans to construct a warehouse project. American company ProLogis purchased a 28 hectares site, thus doubling the surface for its first independent real estate project on the Romanian market. At the beginning of April ProLogis announced it would invest approximately 80 million dollars in the construction of a logistics park which would comprise six buildings having a total surface of 158,000 square meters. For this project, titled ProLogis Park Bucharest A1 the developers had initially bought a 28 hectares property for eight million euros. ProLogis is also analyzing the possibility of new investments, on the same market segment, in Timisoara, Cluj- Napoca, Iasi, Brasov or Constanta, where it had received requests from companies looking to rent spaces. Denver- based ProLogis is specialized in providing facilities and services in the field of depositing and distributing of products. ProLogis also holds, administers or develops 2,340 properties in 77 countries in North America, Europe and Asia.

The Africa- Israel Company will develop its first real estate project in Romania in the area of the Timisoara Boulevard in Bucharest, where it will build commercial, office and residential spaces. The project will be called Cotroceni Park and will have a 53,000 square meters area reserved for retail spaces.
Colliers recently announced that Bucharest would have 14 important commercial centers in all areas of the capital by 2008. Baneasa Shopping City, Floreasca City Center, Galleria Esplanada, Dambovita Center, Liberty Mall, Sema Park and Cotroceni Park are among the retail centers scheduled for completion in the years to come.

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The RON maintains its ascending trend under the pressure of the foreign currency offer on the internal market and the exchange rate listings stabilized at the level of 3.48 RON/euro.
The last transactions of the day were operated at the 3.480-3.483 RON/euro exchange rate, a level similar to the one reported in Wednesday's session.
Banks opened the listings session at 3.481-3.486 RON/euro, the first transfers determining a slight increase to a day's maximum of 3.485-3.490 RON/euro.
Over the 3.4850 RON/euro listing hew orders for foreign currency appeared and the exchange rate lowered slowly to a day's minimum of 3.478-3.482 RON/euro.

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Important health resorts like Poiana Brasov, Predeal and Bran might lose the tourism license after Romania's EU accession because they do not comply with some of the European regulations regarding the tourism sector, shows a statement from the National Association of Tourism Agencies (ANAT).

One of the main criteria in the tourism sector forces health resorts to have a proper sewerage system.
ANAT showed that many of the most important Romanian health resorts do not have such a system and might suffer the consequences of the EU regulations for this sector.

"Local authorities together with the private investment environment must submit a common effort so that the health resorts are compatible with European requests. From the moment the license conditions will take into account the international context the selection of the health resorts will be made automatically," said the ANAT president, Gheorghe Fodoreanu.
One of the most important mountain health resorts is Poiana Brasov. The city's mayor, Gheorghe Scripcaru decided to stop any construction activities and give priority to the rehabilitation of the sewerage system.

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Banca Romaneasca reduced interest for the home purchase loan in euros from 8.9% to 7.5%. The bank offers clients a facility to include all costs in the monthly payment: credit, interest, insurance and commissions. The maximal amount for the home purchase loan is 300,000 euros, reimbursable in monthly payments over a maximum of 30 years.  The mortgage personal needs loan is available up to a ceiling of 50,000 euros with a 8.9% interest, also including life and home insurance in the monthly payment. The personal needs loan matures in 20 years. Clients should have a net montly income of at least 100 euros in the case of the personal needs loan and 200 euros for the home purchase loan.

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The government decided on Wednesday that the vice tax be included in excises, in order to make collecting and levy procedures more effective, announced Prime Minister Calin Popescu Tariceanu. This decision was part of changes approved in the Fiscal Code. The changes referring to the level of excises will be effective starting July 1, 2006, as agreed in the calendar for accession talks with the EU. The increase in excises for tobacco products and alcoholic drinks will be operated in two stages, beginning with an emergency ordinance that will include the changes and July 1, respectively. In the case of strong alcoholic drinks, former provisions established an increase in excises beginning July 1, from 465.35 euros per hectoliter of pure alcohol to 550 euros. Due to the introduction of the health contribution, the excise is to grow to 665.35 euros after the ordinance and rise to 750 euros per hectoliter in the second stage.

The current level in excises for cigarettes is 9.10 euros per 1,000 cigarettes plus 30 percent of the maximum retail price. The initial increase should have been 11.47 euros plus 29 percent, but the new vice tax provides for a 15.53 euro plus 30 percent increase in the first stage and 16.28 euro plus 29 percent increase beginning with July 1. As for fuel, excises are to grow to 513 euros per ton for leaded gasoline but remain the same for unleaded gas (425.06 euros per ton) and diesel oil (307.59 euros). In the case of electricity, excises will increase starting July 1, from 0.14 euros per MW to 0.19 euros for commercial users and from 0.3 euros per MW to 0.39 euros for domestic users. Wine excises will not be modified but beer will see a small increase from 0.74 euros per hectoliter to 0.748 euros, starting July 1.

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Nuclearelectrica, the operator of the Cernavoda nuclear power plant, is to receive 27.7 million euros, accounting for 90.6 percent of funds allocated to the Ministry of Economy and Commerce (MEC), as the government rectified the budget on Wednesday. The Ministry of Finance will give an emergency 10 million euro loan for construction works currently underway on the second reactor and should result in it being operational by March of 2007. The Romanian Authority for Nuclear Activities and the Bucharest Uranium National Company will each receive 1.154 million euros, MEC announced.

Naval yards received state aids worth 22.7 million euros in 2004-2005, mainly in the form of support in the payment of budget debts, a report of the Competition Council shows. The support included converting debts into shares, canceling of debt increases and penalties, phasing out of overdue debts and reductions in the payment of profit tax. The Competition Council is checking the support provided in order to make sure it is compliant with EU regulations on state aid.

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Public acquisition contracts will have the status of public information and the access to them will be restricted only when such information is classified, announced the government's spokeswoman, Oana Marinescu.
The new settlement regarding public acquisitions was adopted by the government in Wednesday's session, the institution fulfilling an EU accession agreement.

The law modifies the procedure regarding public offers initiated by the government, by forcing authorities to send, starting January 1, 2007, invitations for the tenders in an electronic format.
Such invitations will be made available for all market operators to eliminate suspicions regarding possible agreements closed between public authorities and private parties.
The law will become effective July 1, 2006.

Procedures for the assignment of public acquisition contracts will be examined by the Ministry of Public Finance, which will appoint inspectors to verify all the preliminary stages of the issuance.
The ministry will verify all procedures for assigning works with values surpassing 250,000 euros, before the addition of the value-added tax, and services and supply contracts valued at more than 40,000 euros.

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The Romanian Radio Broadcasting Company (SRR) registered a net profit of 1.58 million lei (450,000 euros) in 2005, as its main station, Radio Romania Actualitati had a market share of 21.2 percent, the lowest since 1999. Last year the company registered a profit three times higher, 1.23 million euros. In rural areas, the Radio Romania Actualitati market share decreased from 30.2 percent to 25.3 percent. SRR income mainly results from the radio tax, advertising revenues and from budget payments for Radiocom services. The financial situation of SRR for the first semester of 2005 presented a 108 million euro deficit. The SRR activity report will be debated in Parliament. 

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Alcatel Romania has become the coordination regional center for nine Southeastern subsidiaries of the French Group, taking over the task from Alcatel Italy. The company estimates sales of 350-400 million euros for this area in 2006 and targets 500 million euros for 2007. The Romanian subsidiary will handle management activities for Alcatel Bulgaria, Greece, Cyprus, Albania, Macedonia, Serbia and Montenegro, Bosnia and Herzegovina, Croatia and Slovenia. Alcatel Romania reached a 140 million euro sales level in 2005, a 15% increase from last year. Its headquarters are located in Timisoara and it has 1,200 employees, 600 of which are working in software development.

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The construction works of five new infrastructure projects were approved, among which the Bucharest-Brasov highway for June, the government decided on Wednesday.
The tenders for the contract granting are to be organized in accordance with emergency procedures, meaning the deals must be closed in maximum 36 days.

Besides the construction of the Bucharest-Brasov highway, the government decided to extend Bucharest's road ring, to build a fly-over in the town of Otopeni that is to facilitate the traffic over the railway crossing the locality, and to rehabilitate the 2D National Road linking the localities of Focsani and Ojdula.
The Bucharest-Brasov highway will have a length of 173.3 kilometers and will be 23.5 meters wide in the mountain areas and 26 meters in the field areas. The highway will comprise four traffic lanes. In addition, the drivers will benefit from 14 parking and services areas.

Alongside the highway are to be constructed fly-over passages, pedestrian bridges and viaducts. In addition, 14 crossroads will allow the drivers to leave the highway and head to the localities in the surroundings.

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The International Monetary Fund issued a report showing that the Romanian economy should increase by 5.2%.

Romania's Gross Domestic Product (GDP) increase should be 5.2 percent this year and will boost in 2007 to 5.6 percent, according to estimates in the biannual report issued on Wednesday by the International Monetary Fund (IMF).
The institution's forecast regarding the evolution of the GDP for the current year is similar to last year's 5.5 percent increase estimate, but under the six percent estimate of the Romanian authorities.
Romania reported in 2005 a 4.1 percent economic increase, down compared with the 8.4 percent increase registered in 2004.
The IMF shows that the inflation rate will situate at 7.9 percent for 2006 and should lower to 4.8 percent in 2007.
The National Prognosis Commission (CNP) anticipates an average inflation of 7.2 percent for 2006.

The current account deficit should be about 8.3 percent of the GDP and reduce to 8.1 percent in 2007. The CNP forecast on the same issue shows that the current account deficit should lower by 0.2 percent, to 8.5 percent.
"In Romania and Bulgaria, internal demand surpassed expectations as a result of accelerated crediting, wage increases, the January 2005 tax cuts, and investment hikes. That is why inflationary pressures have intensified in Romania in spite of the RON appreciation," shows the IMF report.

The external deficits of both states are generated by the private sector and represent an important vulnerability source for their national economies. This increases the necessity of reducing crediting, especially for consumer credits, shows the IMF experts.
The IMF warned Romania about limiting salary increases.
The international financial organization showed that Romania needs to implement structural reforms for boosting offers, labor force flexibility, increasing the privatization degree in Romania and improving the business environment in Bulgaria.
Romania will show both an economic increase and an increase of consumer prices above the average increase reported for the Bulgarian business environment.

The IMF shows that Bulgaria's GDP should increase this year by 5.6 percent, while consumer prices by 7.2 percent.
Emerging European states should show an average economic increase of 5.3 percent, the leader of the group being Latvia.
All these states will register current account deficits, the average being 5.4 percent of the GDP.
The largest variations from the norm are expected to occur in Latvia - 12.8 percent, Bulgaria - 10.2 percent, and Estonia - 10.1 percent.

A report published at the beginning of April by the IMF showed that the value of external syndicated credits and bond issues sold on the international market by Romania attained 2.342 billion dollars in 2005.
This figure represents an increase of 76.5 percent over 2004, according to representatives of the international institution.
As reported by IMF analysts, Romania sold bonds last year amounting to 1.113 billion dollars.
In the same period, syndicated credits granted to Romania advanced by 45 percent, from 846.9 million dollars in 2004 to 1.228 billion dollars last year. Most of the sum, 587.4 million dollars, was borrowed in the first quarter. Between April and June, 60.7 million dollars were lent to Romania, while in the last two quarters, syndicated credits attained 372 million dollars and 208.5 million dollars, respectively. In comparison, Bulgaria issued bonds totaling 642 million dollars, while Hungary obtained in the same way 8.5 billion dollars.

According to the IMF study, the share of bad credits in the Romanian banking system was 8.2 percent, up from 8.1 percent the year before. By June 2005, commercial banks established provisions representing 33.1 percent of the bad credits.
Additionally, return on assets increased from 2.5 percent in 2004 to 2.7 percent last year, while the return on equity progressed from 19.3 percent to 22.3 percent.
The total amount of foreign capital that entered emerging economies last year was approximately 407 billion dollars, up from 287 billion dollars in 2004. This evolution was generated by the increase in the number of investors, increase of liquidities and the reduction of interest rates at a global level.

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The Government approved the supplementation of the 2006 expenditures budget for most of the ministries, and the value of the rectification reached ROL 33,370 bln (EUR 930 M), namely about 1 per cent of the domestic gross product (GDP), Nine o'Clock reports.


As result of this operation, the budgetary deficit was also modified upward, namely from 0.4 per cent to 0.9 of the GDP.

PM Calin Popescu Tariceanu wanted to underline that the concurrent rectification brought to the budgetary deficit included also the data regarding the supplementary revenues to the state budget already registered in the first part of this year.

PM Tariceanu assures that the supplementation of budgetary expenses will not affect the macroeconomic objectives.

The main objective of the rectification is investments, especially in infrastructure.

On the other hand, the PM wanted to emphasize that the macroeconomic objectives of Romania remain stable, and will not be affected by the measure of rectification itself, or by the adjustment in the budgetary deficit.

In return, it is well known the position of the International Monetary Fund (IMF) regarding the control of the budgetary deficit, as a sign of economic health, the discussions between the international financial institution?s officials and the Romanian Government almost constantly oscillating on this issue.

However, the supplementary funds will be destined to investments, especially in infrastructure, according to the Premier, who also wanted to mention that the money from the rectification ?cannot be used for supplementing the wages,? although approx ROL 2,000 bln will be destined to cover partially the due salaries, estimated at the moment at ROL 3,800 bln.

The distribution of the money has the Ministry of Transport, Construction and Tourism on the first position, with ROL 5,857 bln, thus confirming the high interest in making investments in infrastructure.

The budget of the Ministry of Education and Research was also supplemented by ROL 3,350 bln, approx ROL 2,900 bln of this money will be used to finance the infrastructure in education field, and the difference to increase the funds destined to the programme for purchasing school buses.

The Environment Ministry budget was also increased ROL 3,000 bln, money that will be spent on preventing and combating flooding.

The structure of the money distribution also showed:

The Ministry of Interior and Administration ? ROL 2,660 bln, the Ministry of Labour and Social Solidarity ? ROL 2,000 bln, the local budgets ? ROL 2,000 bln, the Ministry of National Defence ? ROL 1,240 bln, the Ministry of Economy and Commerce ? ROL 1,065 bln, the Ministry of European Integration ? ROL 880 bln and the Ministry of Justice ? ROL 426 bln.

Moreover, the rectification brought almost ROL 1,000 bln to the institutions involved in providing national safety.

Regarding the funds assigned to the Ministry of Labour, they will be used to cover the allowances given to the mothers with children up to 2-year old.

Also, the budget of the National Social Insurance House was supplemented by ROL 610 bln, according to the data presented by the Government.

The money received by the Ministry of Integration will be used to support the public projects with structural funds.

Five priorities project in infrastructure, to start in two months

Also, the Government established a list of 30 priority objectives in infrastructure field, and the supplementary money brought to the Ministry will be distributed to the development of this critical sector in Romania.

PM Tariceanu referred to five of these projects concerning the development of transports, and the works are to start in two months, given that the technical-economic indicators have already been established.

Thus, the projects include the DN1 route and the Northern by-pass of Bucharest, the lessening of the traffic in Otopeni area through the continuation of the construction works of the flyover close to Otopeni Airport, the upgrading of DN2 D, in Vrancea County, the construction of the eastern by-pass of Cluj-Napoca municipality, namely the construction of 173 km of Bucharest-Brasov motorway.

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HSBC, one of the world's first five banks is involved in a purchase in Romania worth about 130 million euros, weekly Capital informed

Three credit companies put up for sale by the Romanian American Investments Fund stirred its interest.

Romanian American Enterprise Fund (RAEF) decided last autumn to sell three companies it established and which own majority stakes - Motoractive (specialising in leasing), Domenia Credit (focused on mortgage loan) and Estima Finance (consumer finance company).

The Romanian-American Investments Fund invested in them, along with Domo retailer, the German development bank DEG and the European Bank for Reconstruction and Development (EBRD), about 23 million euros.

The short list of those interested to buy the three companies included General Electric Capital investment fund AIG, Societe Generale and HSBC.''

Currently, we are holding final talks with a single one and the signing will take place by the end of this month,'' said Horia Manda, senior vice-president&chief investment officer of RAEF.

Other minority stakeholders of the three companies namely the German development bank DEG, the European Bank for Reconstruction and Development (EBRD) and Domo retailer decided to sell.

Manda refused, however, to unveil the name of the winner.

''The buyer is one of the world's biggest financial groups, which is not yet present on the Romanian market,'' he said, adding that this is one of the names the disclosed by the media.

''The only names mentioned by the media as being on the short list were Caja de Madrid and HSBC, but the first was not included in the short list.

Therefore, it seems HSBC is the plausible variant, Capital weekly informs.

Moreover, judging upon Manda's statements according to which the finalist is a big financial group that doesn't run activities in Romania yet, HSBC belongs to this category.

Motoractive (leasing) was established in 1999 and its shareholders are RAEF with an 80 percent stake and DEG with the remainder of 20 percent.

Last year, the company had assets worth 107 million euros, financing worth 95 million euros and a net profit of 3.8 million euros. For this year, it estimates assets worth 160 million euros, financing worth 125 million euros and net profit of 5.5 million euros.

Domenia Credit (mortgage loan) was set up in 2003.

Its shareholders are RAEF with 60 percent stake, EBRD - 20 percent and DEG with a 20 percent stake.

In 2005, it had assets worth 25 million euros, financing worth 12 million euros and a net profit of 220,000 euros.

It predicts it will post this year assets worth 47 million euros, funds worth 22 million euros and a net profit worth 400,000 euros.

Ralfi- Estima Finance (consumer finance) established in 2002 had assets in 2005 worth $33 million, financial intermediations worth $74 million, a net profit worth $550,000.

For 2006, it estimates assets of $89 million, intermediations worth $110 million and a net profit of $2.5 million.

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According to the spring report of the National Prognosis Commission,Romania's trade deficit could reach 13.12 billion euros in 2006, and it is expected to grow up to 21.7 billion euros in 2010.

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Romania?s electrical energy production was, for the period of January 1 ? February 28 2006 11,451 billion kWh with 4.1 percent (456 million kWh) over that registered during the same period of the previous year, according to data of the National Statistics Institute. The largest quantity of energy was produced in classical thermo-power-stations ? 7,736 billion kWh (a plusof 2,4 percent against 2005) and in hydro ?power-stations ? 2, 713 billion kWh (increase of 3.4 percent). In the nuclear-electrical unit in Cernavoda there was produced a quantity of 1,001 billion kWh, 22,8 higher than the first two months of last year. At the same time, during the mentioned period, Romania imported a quantity of electrical energy of 180,8 kWh and exported 1,203 billion kWh. Out of the total quantity of energy, 6,894 billion kWh (59, 3 percent) was used in the economy, 1,537 billion kWh (13,2 percent) represented population consumption and 126,4 million kWh (1,1 percent) were destined to public lighting.

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Romania ratified the Stockholm Convention regarding persistant organic pollutants (POP) through Law no. 261 of July 15 2004, the Ministry of Environment informs.

Persistent organic pollutants are organic compounds of natural origin, resistant to degradation, with low solubility in water and high solubility in fatty environment, resist degradation in natural conditions, are airborne, waterborne and through migrating species beyond international bondaries, are deposited far away from their origin place and bioaccumulate in terrestrial and acquatic environments, have toxic effects on human and animal organisms.

In art.7 of the Stockholm Convention it is mentioned the obligation of every party to establish, within two years since the coming into force of the present convention, of a National Implementation Plan (PNI) for the provisions of the convention. The plan will be revised and updated at regular intervals and, according to specific ways, through a decision of the Conference of the Parties.


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The Energy Financing Team (EFT), one of the most important energy traders in Central and South-Eastern Europe, announced the kick-off of a two-year investment program for Romania worth 100 million euros, representing a greenfield project for hydro- or thermo-power generation, ACT Media news agency reports.


"Vertical integration and the development of our own production capacities are EFT's main targets on the medium and long term," said James Nye, EFT general manager.

Without getting into project details, the company official added that after having considered several opportunities represented by the already exiting capacities in Romania, EFT had opted in the end for a new investment.

Right from its official entry on the specific market in 2005, the trader expressed interest in the development of production capacities on the domestic market.

Presently, hydropower plants represent the cheapest energy-producing method.

For 2006, which is the first year when EFT will directly operate on the domestic market, company representatives estimate sales worth 20 million euros.

EFT brokers energy exports from Romania since 2001, buying energy from producers like Hidroelectrica or Termoelectrica.

In November 2005, the company officially announced its entry to the Romanian market with one office.

EFT announced that the extensive investigation initiated in 2003 over its business in Bosnia - Herzegovina under the conduct of Bosnia international prosecutor Jonathan Ratel has come to end without any charges pressed against it.

The investigators found no law offence in EFT's procedures.

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The cement market last year surged by 30% in terms of value, reaching an approximate 400 million euros, according to market estimates. Market growth was made possible because cement consumption last year advanced by about 10%, and the average price rose to around 60-65 euros per tonne, from the 50-52 euros average of the previous years.

Radu Ghetea, the first vice-president of Alpha Bank, yesterday secured a new three-year term as the Romanian Banking Association (ARB) chairman. He ran against Mihai Bogza, Bancpost chairman, and defeated him 24 to 15 votes.

The Vaslui-based Vascar company, one of the medium-sized players on the meat products market, will invest over 3.5 million euros to modernise the plant in Vaslui. "In the wake of this investment project, the area of distribution will be expanded, export activities will be launched, costs will be reduced and profitability will rise," says Rita Carmen Popa, marketing manager of the company.

Foreigners' money boosted the volume of transactions on the interbank forex market to a record 14.3 billion euros in March, an increase of more than 6 billion euros compared to last year, Ziarul Financiar writes. 

The increase in interests over the last few months has rekindled foreign investors' interest for speculative placements in RON, even though the overall emerging market region is seeing its allure fluctuate. Starting in December, when interests on the monetary market began rising from less than 1 percent minimums in October and November, foreign exchange transactions amounted to over 10 billion euros every month, amassing almost 50 billion euros in four months.

The extent of the capital moves ordered by financial investors was revealed a few days ago, when volumes plunged to about 200 million euros, as Western markets were closed due to the Catholic Easter holidays.
Immediately afterwards, the volume of daily transactions reverted to 700-800 million euros.

"The increase in the volume over the last few months is tightly connected to the financial investors' presence. If we think that their presence was not that significant a year ago and look at how much the volume has grown lately, we could say that approximately 40-50 percent of the daily transactions are financial and not commercial," comments Radu Craciun, chief analyst with ABN Amro Romania.

There are somewhat more "pessimistic" estimates floating around the market about the amount of the speculative capitals on the forex market.
"Only 20 percent of these funds are commercial money, the rest is speculative money. The last few days have provided a pretty accurate picture in this regard," a dealer says.

What is for certain is that a year ago it only took a 10 million euro order for the market to react right away, with either an appreciation or depreciation of RON, while such amounts are now easy to swallow, with exchange rate movement occurring at orders of 15 million euros or more. The Romanian corporate clients' orders usually vary from 1 to 5 million euros, while foreign investors enter and exit with 5 to 10 million at one time.

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The Deputies from the Privatization Commission have rejected the government ordinances regarding the privatization of the Romanian Savings Bank (CEC), the National Lottery and the National Printing House. They justified their decision by stating the Minister of Finance Sebastian Vladescu had not been present at the commission's meeting. The minister's absence irritated the members of the commission who expressed their indignation at the fact that Vladescu had skipped other sessions before when projects initiated by the government were to be discussed.

Although there was a proposal for postponing the discussion of privatization ordinances for the next session, the proposal for the rejection of the ordinances made by the Social Democrat Mihai Tudose obtained most of the votes. The most vehement criticism against Vladescu came from the commission's vice president Octavian-Mircea Purceld (Greater Romanian Party).
After the rejection of the ordinances, Purceld proposed that Vladescu should be officially summoned before the commission for briefing the deputies on the ministry's policy regarding the privatization of the National Lottery and the National Printing House. "Maybe now that we rejected his ordinances he will start thinking," said Purceld.

The deputies initially tried to discuss the ordinance for the privatization of CEC and even found out about existing differences of opinion regarding the evaluation of the bank's assets. Accounting books say CEC has assets totaling 80 million euros while the financial consultant appointed in view of the privatization estimates them at double that figure.
The attitude of the commission changed when the advisor of the minister announced that existence of a draft ordinance which proposes a series of modifications to the law for the privatization of CEC. More specifically, the government planned to establish contract clauses that would stipulate for CEC to be a bank for rural areas and the allocation of a 9.9 percent stake from the CEC assets to be privatized to the Proprietatea Fund.

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Cable operator RCS&RDS registered 200 million dollars in turnover last year, a 60 percent increase from the 125 million in 2004. This increase was due to national and international expansion through new services and improvement of existing ones. RCS&RDS is one of the largest players on the cable communications market. Through its CATV network it provides landline telephone, Internet and data transmission services. RCS&RDS has a 25 percent share of the cable market, 80 percent for satellite TV services, 20 percent of the Internet market and over 9 percent in the case of landlines telephones. In the first quarter of 2006, the company had 400,000 landline telephone subscribers, a figure expected to increase to 700,000 by yearend.

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Austria will organize in June a meeting in Vienna for the signing of an intergovernmental agreement in support of the Nabucco pipeline project, stated Tuesday the minister of economy and commerce, Codrut Seres.
The meeting's participants will be representatives of Romania, Bulgaria, Hungary, Turkey and Austria, the five countries involved in the construction of the gas pipeline.
"The meetings objective is to expedite all processes so that the project may be completed according to the agreed schedule," said Seres.
Turkey requested the project terms and conditions be revised, asserting that the participation of other countries simply by paying a tax is not fair to the five countries mentioned above.
The Nabucco project entails the construction of a transit natural gas passage from the Caspian Sea region to Western Europe.
The Nabucco pipeline should become operational by 2011 and will have a yearly capacity of 4.5-13 billion cubic meters.
This project could lead to a decreasing dependence of the Western states on Russia.
"Russia wishes to sell gas to Greece, Italy, Israel and other countries through the Nabucco project," stated an official for Reuters.
However, Turkey wishes to have the right to veto the joining of new partners to the Nabucco project.
Officials, quoted by Reuters, believe Turkey's initiative is an attempt to impede Iran from selling natural gas to Europe for a lower price than Turkey's.
Romania is very interested in the project since it would allow the connection of the Romanian gas transportation system with similar systems from Hungary and Bulgaria and also integration into the European system as a whole.
Several companies are involved in the Nabucco project: Botas (Turkey), OMV (Austria), MOL (Hungary), Bulgargaz (Bulgaria) and Transgaz (Romania).

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COSMOTE Romania and Internity, the IT & C distribution chain of French Group Avenir Telecom, announced yesterday a partnership by which Internity is to distribute COSMOTE products and services exclusively in its 64 Romanian shops. Cosmote announced two offers for prepaid and subscription services. The prepaid package includes a Nokia 1100 handset and a five euro COSMOTE card for 189 RON. The subscription package includes a nine euro monthly fee that provides 60 minutes of talk time to any network and a free Motorola C261. Avenir Telecom owns 400 stores in Europe and had the Internity and Globalnet brands in Romania. Cosmote, one of the top five mobile operators in Europe, has a strong presence in the Balkans, with over 8.2 million clients. Just three weeks after entering the Romanian market in December 2005, COSMOTE Romania had 50,000 clients.  

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Cable communications company UPC Romania has taken over the satellite Direct-To-Home (DTH) TV operator Focus Sat in a transaction made public last week. Richard Anderson, managing director of UPC Romania, announced the move in the second half of last year after Chellomedia, the digital service division of Liberty Global Europe (the group which also comprises UPC) bought the first 50 percent of Focus Sat. At that time, the company was evaluated at EUR 6 to 8 million.

Mobile phone operator Orange Romania launched several video services that offer customers the possibility of watching TV shows or movies through the WAP (Wireless Application Protocol) portal.

Orange closed broadcasting contracts with 13 television and four radio stations. Both Orange subscribers and PrePay users can watch BBC World, TV5, Fashion TV or Realitatea TV after paying a four $USD subscription that is available for 30 days. The cost of a 24h subscription is of one USD.

Orange launched the Music Store service that allows customers to buy the music of their favorite singer or band. The cost of a melody is of two dollars without the value-added tax.

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Companies facing insolvency can start bankruptcy procedures in 60 days through the simplified procedure that is part of the new Insolvency Law, said the project's coordinator of PricewaterhouseCoopers, Ana-Irina Sercane.
The new law will replace the present standard act that settles the judiciary reorganization and bankruptcy procedures.
The project for issuing the Insolvency Law was supported by the European Union through a PHARE project developed with the consultancy firm PricewaterhouseCoopers.
Besides the new law, the project referred to the development of a 'good practices' manual and an IT system for managing insolvency cases.
Sercane said that the simplified procedure is applied to companies that require this process for closing the company. The same procedure will apply to companies that lost the right to judicial reorganization. The latter procedure is forbidden to companies that benefited from bankruptcy in the last five years of their activity and to companies whose managers committed felonies regarding competition rules.
The insolvency law was voted by the Parliament at the beginning of this month and it should be published in the official register this week.
The judge will limit actions only in the taking of commercial decisions and solving the eventual complaints of the procedure participants.
This will no longer modify or cancel the measures taken by the judicial administrator (in charge with finding the proper solutions for the company that faces financial problems).
The law project also refers to the creation of distinct bankruptcy departments within tribunals.

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Electroputere Craiova announced on Wednesday that it had won a 14 million euros contract for the delivery of power transformers to Greece. Electroputere is currently undergoing a restructuring process, which should be complete by June 2006 and result in the layoff of 600 employees in order for the factory to become attractive for foreign investors. Romanian authorities have tried to privatize the company four times so far, but to no effect. In 2001, at the first privatization attempt, General Motors, General Electric, Siemens and Karsdorfer had shown interest. The last attempt was in 2005 but the offer submittal had been delayed four times as investors asked for more time to improve their offers.

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MobiFon, operator of mobile telephony network Connex-Vodafone changed its name to Vodafone Romania on April 18. Vodafone Romania had over 6.1 million clients at the end of 2005. British Group
Vodafone had taken over a 79 percent stake in MobiFon in May 2005, in a transaction worth 2.5 billion dollars and thus controlled 99.1 percent of the Romanian operator. Several months later businessman George Copos sold the remaining 0.9 percent to Vodafone.

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Private investors will be invited to participate in the construction of the Romanian-Turkish submarine electricity cable. However, the electric energy transportation system will still be administered by national operators Transelectrica and Teias, stated Tuesday the minister of economy and commerce, Codrut Seres.  
He also added that private companies can participate in the project's development at a proportion of 98 percent.
"Another memorandum is to be negotiated next and we will focus on developing the feasibility study and the business plan," continued Seres.

The feasibility study will take approximately six months.
The value of the project is currently estimated at 400 million euros.
"According to the initial structure, 50 percent of the costs for the submarine cable project should be borne by the Romanian party and 50 percent by the Turkish party. The exact ratio will be determined when the business plan and feasibility study are completed," explained Seres.

The 400 km long cable will run under the Black Sea, connecting the energy systems of the two countries through Constanta, Romania and Pasakoy, Turkey.
Presently, there are more scenarios regarding electric energy transportation through the submarine cable. One possibility would be to transport energy from Turkey to Romania and beyond to Serbia, Hungary or Slovakia, Poland. Another option is to transport it on the Russia-Ukraine-Romania-Turkey route or directly from Romania to Turkey.

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The National Bank of Romania fully took in all the bids submitted by 21 commercial banks on April 17 for one-month deposits, having gathered up approximately 4.3 billion RON (some 1.2 billion euros) in the process, daily Ziarul financiar reported, ACT Media news agency reports.


The interest paid by BNR stayed at 8.5 percent per annum, which is the same as the monetary policy rate of BNR.

BNR Governor had announced early this March that BNR will conduct a tight monetary policy by sterilisng the surplus of the local currency in the monetary market, while counting on a fall in inflation that would bring a slight rise in the real interest.

BNR sold last week three-month certificates of deposit (CDs) worth 3.75 billion RON (slightly over 1 billion euro), for which total bids of 4.9 billion RON had been submitted.

Liquidity was high in the market, as pervious issues of certificates become due.

The prospects for BNR sterilising the surplus encouraged currency dealers to keep interest high, at 8 percent per annum.

In late-March, BNR reported a cash stock of some 6.5 billion euros in one-month deposits and three-month CDs.

Compared with March 2005, the volume of sterilized currency advanced 12 percent when stated in euros.

Over the past twelve months, the share of cash stashed by banks in CDs has increased from about 29 percent in March 2005, to 60 percent in 2006.

Besides the 6.5 billion euros captured by BNR, the currency in circulation outside the banking system is standing at 3.2 billion euros, up 48 percent from the same period of the year before.

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The projects initiated this year for the construction and rehabilitation of the transportation infrastructure will require 500 million euros, said the Minister of Transportations (MTCT), Constructions and Tourism Gheorghe Dobre.
The total value of road infrastructure investments will reach to 600 million euros in 2006 and the sum does not include the financing of the Brasov-Bors highway.
The new construction works will be financed from budgetary funds that are obtained from the EU and international institutions like the European Bank for Reconstruction and Development, European Investments Bank and Japan Bank for International Cooperation.

The main infrastructure projects refer to the Bucharest-Comarnic-Brasov highway, the rehabilitation of the National Road 1 on the Comarnic- Brasov sector and the reconstruction of the Bucuresti-Pitesti highway. MTCT will coordinate the construction of the Buftea-Sacele, Petea-Satu Mare and Buzau-Brasov road sectors.
Another important project is the finalization of the construction works for the Bucharest-Constanta, Drajna-Fetesti and Fetesti-Cernavoda road sectors.
The budgetary deficit target for this year was increased to 0.9% of the Gross Domestic Product (GDP), from the 0.5% initial level, by supplementing general expenditures with 947 million euros, said yesterday Prime Minister Calin Popescu Tariceanu.
The PM underlined that this decision will not affect the macroeconomic imbalances, the main purpose being the beginning of some investment projects.
"I underline the fact that all the money from the budgetary rectification will go to the capital expenditures sector and will not be used for salaries or other similar rights," said Tariceanu.
MTCT was the main beneficiary of the rectification with a sum amounting to approximately 172 million euros destined to road infrastructure and railway.

The Ministry of Education and Research will receive 102 million euros of which 14 million euros for the purchase of school busses and seven million euros for capital reparations. The difference is destined to the education infrastructure.
The Ministry of European Integration will receive 25 million euros to continue the public projects financed from structural funds. The government allotted for the works destined to preventing floods damages, 86 million euros that will go into the account of the Ministry of Environment and Water Management.
Local budgets received 57 million euros.

The investments of the economic agents with state capital will be supplemented by 97 million euros and the social assistance programs receive 91 million euros.
The project includes expenditures made for personnel a 65 million euros increase, mainly for covering the salary differences between October 2001 and September 2004, of the teachers from the state education system.
The budgetary reserve fund made available for the government will receive supplementary funds amounting to 71 million euros.
A series of supplementary expenditures were proposed for the Ministry of Labor (57 million euros), the Ministry of National Defense (35 million euros) and the Ministry of Economy and Commerce (30 million euros).
MFP estimated that the value-added tax (VAT) should bring 253 million euros while the taxes on salaries and revenues should bring an additional 128 million euros.

The ministry lowered the estimates for the revenues brought by the excise tax and the taxes on micro-enterprises.
The 2005 budget deficit was of 0.8% of the Gross Domestic Product (GDP) and under the 1% level established by the public authorities in the last budgetary rectification, according to the preliminary data transmitted on yesterday by the Ministry of Public Finance (MFP). The budgetary revenues represented 29.7% of the GDP, same as 2004, but the expenditures represented 30.5% of the GDP. Revenues coming from the VAT showed a positive 1.1% GDP increase while the profit tax revenues decreased by 0.4%.

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About 60 percent of the production process of Dacia Logans would have been located in Iran.

Dissentions started as the two parties did not agree on the Iranian faction's share of Logan exports, according to a government official, quoted by Reuters.
"The Iranian Ministry of Industry and Mines has ordered the suspension of the Logan project until Renault takes into account the Iranian point of view on the deal," stated the institution's spokesperson, Mohammad Karimi.

Renault accepted that 60 percent of the production process would be carried out in Iran, with the possibility of using the technical platform for the construction of other models. According to the French producer's representatives, the company did not demand a monopoly on the Iranian market for the class of automobiles to which Logan belongs. Renault announced that a solution for the crisis was sought with the Iranian authorities.
"The main issue remains Iran's desire to receive a quota of the Logan exports," admitted an official of the Iranian ministry involved in the project.

"It is a negative sign to the international community which says we cannot be trusted,' the Iranian analyst Saeed Leylaz, adding that the ministry's decision would also have a major impact on the local auto parts sector. Leylaz explained that contracts amounting to 800 million dollars had already been signed with local suppliers in the joint venture to produce Logans in Iran. The country had previously excluded a Turkish company from a project for the administration of a new airport, which in the analyst's opinion was a serious blow to Iran's reputation. "In the case of Logan we would also lose our internal reputation because thousands of suppliers would be affected," said Leylaz.

The Logan has been produced in Romania since 2004 and in countries like Russia, Morocco and Columbia since 2005. This year Renault intended to begin production in Iran in partnership with the companies Iran Khodro and Saipa.
Renault also signed a partnership with the Indian tractor and sports utility vehicle maker Mahindra & Mahindra to support its first foray into India's passenger car market. The two companies established a joint venture called Mahindra Renault to sell the Logan model produced by the Romanian manufacturer starting in 2007. Renault controls 49 percent of the joint venture.
In a Renault press release from mid-2005, the value of the partnership is estimated at 125 million euros.

The sales of Romanian carmaker Dacia, acquired by Renault in 1999, recorded a significant sales advance mainly due to the success of the Logan on all the markets where it is sold. Last year, the carmaker sold 163,899 vehicles, representing a 70 percent climb compared with the previous year. For subsequent years, the company foresees a continuation of the ascending trend with about 200,000 units sold in 2006, 250,000 in 2007 and 300,000 in 2008, half of the production destined for exportation. In 2005, Automobile Dacia obtained a profit for the first time, following the takeover of the plant by Renault. Net profits attained 57 million euros, as the turnover amounted to 1.2 billion euros, representing an increase in sales of more than a 100 percent compared to the previous year.

Logan was launched on the French market, where it is sold at a staring price of 7,500 euros. After France, the three-box sedan entered the Spanish market on June 16 and the German market on June 17, 2005. Since January 2006, the Romanian car has also been available in Belgium, Switzerland, the Netherlands, Italy and Austria.
In France, the standard version comes with ABS brakes, two airbags and four headrests. Other versions sold in France are Ambiance, at a price starting from 7,800 euros, and the Laureate going for 8,550 to 8,990 euros, depending on the cylinder capacity.

The available range is identical in all other countries, but the sale price varies mostly depending on taxes and transportation costs in each country. By yearend, Renault intends to sell the Dacia Logan model on 50 international markets.

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Avicola Calarasi (south-east of Bucharest) one of the most important players on the meat market will take a loan worth five million euros from the Romanian Commercial Bank (BCR) to expand production capacities and upgrade existing structures. Last year the company posted 36 million euros in turnover, up by about 40 percent as against 2004, situation prompted mainly by the increase in the production facilities. Also last year the company produced 25,000 tonnes of meat, following the new investment programme. One of the biggest problems the company had to cope with last year was brought about by the export bans because of bird flu. Until October 2005, Avicola exported to Germany, the Netherlands and France and it had won a contract with the UK. Because of the export bans the company sold 2,000 tonnes of meat below the market price, says Rompres.

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The State Assets Realization Authority (AVAS) will put up for privatisation 17 majority share packages held in its portfolio, which amount to 193 million new lei. According to AVAS, the criteria that was used for choosing the companies to be included in the Priority no. 1 were the value of the share capital held by AVAS, the number of employees, the turnover and the profit or the loss registered according to the last financial balance.

Of the 17 companies included in the Priority no. 1, the Moldova Iasi Railway Construction company (AVAS holds 50.95 percent) has already been sold. The company has 724 employees and provides metallic constructions and subassemblies for railway transport. The buyer is Roads and Bridges Private Enterprise (ALDP) Ltd., which is part of Omega - Tehnoton Iasi group.Other seven companies - Tractorul UTB Brasov (AVAS holds 80.18 percent), Nitroexplosives, Nitrofertilizer, Nitroservice, Nitrocontrol, Nitrotrans Fagaras - which resulted after Nitramonia's division - and Laminorul Braila (69.99 percent) are at present in different stages of negotiations for privatization, and a minority package will be sold via the Bucharest Stock Exchange.

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Piraeus Bank will increase its share capital by up to 25 million euros, with the final amount to be decided by the General Meeting of Shareholders, which will take place on April 27, ACT Media news agency reports.

According to the meeting notice, the shareholders will also discuss the appointment to the position of chairman of the Board of Directors of Stavros Lekkakos, who will replace Michael Colakides.

Lakkakos has until now held the position of member of the Board of Directors, and Colakides will remain a member of the Board.

The bank's officials could not be contacted to comment on this information.

The bank's main shareholder is the Greek financial group Piraeus Bank, which entered the market by acquiring the stake of Pater Credit Bank in 1999.

Piraeus Bank Romania, which currently has a share capital of 66.1 million RON (18.9 million euros), ended last year with total assets standing at 511 million euros, 95 percent more than in December 2004.

The bank last year posted a pre-tax profit worth 1.8 million euros, 14 percent below the figures in 2004.

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Romanian home appliances maker Arctic, majority-owned by Turkey's Arcelik, reported sales of 150 mln euro ($185.2 mln) for 2005, up 20 pct compared to 2004, the company said on April 19, 2006. Sales on the domestic market amounted to 100 mln euro ($123.44 mln) in 2005, up 10 pct compared to 2004.

Arctic's exports rose 15 pct on the year to 480,000 units in 2005. The company exports its production to 30 countries, with major export destinations including France, Germany, Spain, Austria and Poland.

Arctic targets sales of 180 mln euro ($222.2 mln) to 185 mln euro ($228.4 mln) in 2006, of which refrigerator exports are expected to account for 75 mln euro ($92.6 mln).

The company held 30 pct of the local market for home appliances at end-2005 with its two brands Arctic and Beko, 45 pct of the refrigerators segment, 20 pct of the washing machines segment, 20 pct of the gas cookers segment and 10 pct of the TV sets segment, Arctic's sales and marketing director Monica Iavorschi said.

Arctic plans to soon launch production of plasma and LCD TV sets. Arctic projects the dishwashers segment to rise by up to 30 pct in 2006 compared to 2005, refrigerators, washing machines and gas cookers segments by only up to 5.0 pct.

The company invested a total of 25 mln euro ($30.9 mln) over the last three years, of which 10 mln euro ($12.3 mln) only in 2005 to boost production by 10 pct. Arctic produced 900,000 home appliances units in 2005, up from 750,000 in 2004.

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Omnilogic, a Romanian company distributing IT&C products, last year registered turnover worth 162.3 million dollars (134 million euros), an increase of 35% year-on-year. Company officials specified that EBITDA tripled compared with 2004, without offering further details related to the value of profit.

RomTelecom, one of the leading players on the domestic communications market will invest approximately 10 million euros in order to complement and expand its data hosting service portfolio, branded as CyberHost.

Alro Slatina, the local aluminum producer, has posted EUR 26.6 million in net profits, a seven-fold increase on the same period last year, and a turnover of EUR 161.7 million.

Marius Ivan, former general manager of Henkel Bautechnik Romania, has sold his 35 percent stake in the company, officials announced last week. The firm is now fully owned by the German mother company.

According to the National Statistics Institute (INS), the oil processing industry and treatment of nuclear fuels in January posted increases for exports of 83.8 percent compared to same time last year.

Thus, exports amounted to some 197.4 million EUR. At the same time, imports in these fields decreased by 24 percent, up to some 35.7 million EUR.

In January, the value of orders in oil processing industry increased by 77 percent, up to 1.5 billion EUR. At the same time, turnovers of companies that operate in these fields increased by 37 percent.

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SABMiller group, which owns Ursus Breweries in Europe posted a 5 percent increase in sales, because of the sales reported in Poland, Russia and Romania, the company announced.

Dieter Schulze, CEO Ursus Breweries said: "These results are important and show our abilities to achieve constant growth on a very competitive market. SABMiller's strategy mainly focuses on local brands.

Of company's estimates, best selling premium brand was Ursus, while Timisoreana was the best selling brand on the mainstream segment.

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Calarasi-based Avicola company plans to contract loans worth 7 million EUR to invest in the upgrade of slaughter houses and farms. The decision is to be submitted for approval during the Extraordinary Shareholders Assembly, which was scheduled for late April.

According to Elie Daher, executive manager, the money will be invested in a poultry farm in Calarasi countu and a slaughter house that can process 5,000 units per hour. Investments will be completed this year.

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Restaurant chain City Grill and cafeteria chain City Café last week opened their tenth unit within the Carrefour Feeria complex. At present, City Grill employs some 500 people and the investments rose from 250,000 EUR in 2004 to 600,000 EUR during the first four months of this year. The company last year posted a 1,8 million EUR turnover and estimates some 5 million for this year.

Dragos Petrescu, CEO of the chain, said: "When we have first started the business we said that we must become the most important restaurant and cafeteria chain in Romania. At the same time we planned to open such units in commercial areas, business centers and historical centers of towns."

The company made a habit of opening both restaurants and cafeterias at the same time and sold the franchise for three of the units. City Café was first opened at Charles de Gaulle Plaza in 2005 and was followed this year by the franchised cafeterias in Oracle Tower and Baneasa Business Center. A fourth unit was opened in February in America House, while the first unit outside Bucharest opened at Timisoara in March

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Two new factories are going to be built in the Arad-Curtici Free Zone (ZLAC) until fall. Investments are estimated at approximately 23 million euros and are intended for producing lighting devices and car upholstery sponges.
The Director of ZLAC Administration Mircea Pavel stated Tuesday that construction works started a week ago and would be completed in October.

The Austrian company International Lighting Technologies, part of the Zumtobel Group will invest 15 million euros in building a factory for lighting devices, creating 400 new jobs.
"We talk about one of the world's leaders in the production of lighting devices that will build on the Curtici platform a factory on a total area of 12,500 square meters," said Pavel.

Another company which started the construction of a production facility in the area is ERT from Portugal. ERT announced that it would invest eight million euros in ZLAC and hire 400 locals by the end of the year.
Presently ZLAC accumulates investments of over 130 million euros. There are 140 companies in the area providing about 5,000 jobs for locals. In 2005 ZLAC Administration registered a 340,000 euro net profit, an increase of six percent compared to 2004.

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The leading board of Microsoft required from the Bucharest authorities data regarding the costs of the labor force and the training level of the young people working in the IT sector.
Microsoft wants to open in Romania a research, development and assistance center, according to government sources.
The company will announce over the next period investment projects that it intends to develop in Central and Eastern Europe, including Romania.

Paula Apreutesei, the company's business strategy manager for Southeastern Europe, said that Microsoft showed its interest in opening a technical support center in the Central and Eastern Europe.
Microsoft holds in the region 20 branches. The services department of Microsoft Romania reported for the fiscal year that ended in June 30, 2005 a 95 percent revenue increase, to 2.3 million dollars.
Microsoft will launch an antivirus program in June making its debut on this market.

The product called Windows OneCare Live, will be supplied on a subscription basis and is the first step to a full service which would also include firewall and anti-spyware programs. Microsoft will charge 49.95 dollars per year for a three computer license. The product is addressed to individuals and small companies.

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Arctic Gaesti expects a 180-185 million euros sales level for 2006. Exports of refrigerators to over 30 countries will account for 75 million of this sum. Sales in 2005 include deliveries of Arctic and Beko refrigerators, manufactured in Gaesti and other home appliances (washing machines, TV sets and stoves), produced in the factories of the Turkish Arcelik Group, the majority shareholder of the Romanian company. Artic has a 30% share of the 350 million euros home appliances market and controls 45% of the refrigerator market, 20% of the washing machines and stove markets and covers 10% of the TV set market. The company invested about 10 million euros for increasing production, extending the range of products and modernization in 2005.

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The World Bank Mission in Romania will not forget impoverished people who are disadvantaged in health, education, pensions and social security, explained World Bank Country Manager Owaise Saadat upon the opening of a book exhibit at the Central University Library. The World Bank Mission to Romania will continue its activity for several years in an effort to assist Romania fulfill its commitments to the EU, by providing knowledge and project design to sustain the huge grants for structural and cohesion funds Romania will receive after accession. Through its programs, the World Bank will help the approximately four million Romanian farmers meet EU standards in order to export their produce and gain easier access to subsidies under the common agricultural policy.

The cadastre program will help farmers obtain titles for their land, while in the field of education the World Bank will target rural areas, trying to provide equal chances for children. In the Environment chapter of the EU agreement, Romania made commitments to invest 15 billion euros in improving drinking water quality. Saadat believes that money is not an issue, as Romania can easily obtain financing, but that municipalities need projects that would well-serve consumers. However, Saadat warned that there is no acquis or chapter for the development of the social sector: health, education or social issues.

"The World Bank is a poverty bank; its mission is to eradicate poverty and Romania still has great needs in this matter," Saadat said. The World Bank has been a development partner for Romania since the "dark days of 1989" and offered loans totaling over 4.2 billion dollars. Ambassador Saadat expressed his wish that Romania and the World Bank remain strong friends and partners even after Romania becomes a donor country, as the Romanian government, the EU and World Bank have many similarities.

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Skyrocketing oil prices could set off inflationary pressures that might affect the euro zone economy, said on Tuesday Jaime Caruana, governor of the National Bank of Spain. Brent crude rose on Tuesday by 74 cents, to a record-breaking 72.20 dollars per barrel, due to concerns about military intervention in Iran and production problems caused by violence in Nigeria. OPEC officials believe that the oil price is unrealistic, not reflecting the market but geopolitics. There is no current deficit in oil deliveries especially as Saudi Arabia and other producers announced they would guarantee supply. Ministers of OPEC states will analyze the market situation at the end of the week during the International Energy Forum in Doha. In addition, France announced it would ask for an increase in production during a G8 meeting in Washington at the end of the week.

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Diesel engine car demand stagnated in Europe in the first months of 2006, after three years of constant growth, shows a study by market researchers Jato Dynamics. The market share of diesel cars was down 0.3 percent to 50.7 percent in the first two months of the year. The average growth rate on this segment was 7.5 percent in the last three years. The slowdown was triggered by modernization costs carmakers had to support for the adoption of Euro IV pollution standards that led to a price difference between gasoline and diesel thrust engine auto vehicles. This led to diminishing demand for diesel vehicles, especially in Austria- 7 percent, Italy-4 percent and Slovenia- 6 percent. In spite of this, Norway saw a 16 percent increase in demand, and Poland and Sweden, 8 percent and 7 percent respectively.

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The British company Danube Property Investment Limited intends to obtain 288 million euros by listing Alternative Investments Market (AIM), a market administered by the London Stock Exchange, in order to invest in real estate projects in Romania, Croatia and Bulgaria.
The company, registered in the Guernsey Islands, already identified some investment projects, such as a retail portfolio in Romania, malls in Bulgaria and Romania, and tourism projects in Croatia, totaling around 600 million euros, shows a company statement sent Tuesday to AIM.
Danube Property will take over projects in their final development stages as well as new projects generating revenues in Central and Eastern European countries, especially in those countries that are about to enter the EU.
Company president Peter Barton estimated that investments in the Eastern Europe are attractive, taking into account the significant economic growth of the states about to join the EU and the "historical deficit" of real estate project in this region.
The British company is interested in the real estate sector and will mostly focus on the retail, tourism and residential segments, as well as the creation of leisure centers.

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Romanian plans to spend more on roads and education will result in a near-doubling of the 2006 budget deficit to 0.9 percent of gross domestic product, Prime Minister Calin Popescu Tariceanu said Tuesday.

He said the increase would not affect the country's economic stability and that it was well below the three percent limit set by the European Union's euro-zone.

"Even if the deficit grows, it will stay within reasonable limits," Tariceanu said.

Romania, which is scheduled to join the EU in 2007, is not planning to adopt the euro in the near future, but has to maintain economic stability to qualify for EU membership.

Tariceanu added that the education system would receive an extra 335 million lei (euro100 million, US$120 million) for improvements on school campuses.

"The best possible investment on medium and long term is in education and research," Tariceanu told a gathering of university leaders in the western city of Timisoara.

The government has promised to allocate 1 billion euros this year for school improvements as part of a deal with teachers, who led a three-week strike in November.

The government is also planning to allocate an extra 550 million lei (euro165 million, US$200 million) for transport improvements.

Finance Minister Sebastian Vladescu said the additional spending would not spur higher inflation because most of the money will be spent on infrastructure projects.

The government is planning to amend the budget on Wednesday.

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Coca-Cola HBC Romania, the bottler of the Coca-Cola beverages for the Romanian market made more than 38 million euros in net profit in the first 11 months of last year, almost double the profit for all of 2004, writes Ziarul Financiar.

The 11-month result was published in the Official Gazette, in a financial statement that the company used for a project to merge with Societatea de Imbuteliat Coca-Cola Galati.
According to the same statement, Coca-Cola HBC's net profit in Romania was 139 million euros (504 million RON) at the end of November. The Coca-Cola officials did not care to comment on the results and did not provide financial data for all of 2005.

"The financial performance of Coca-Cola HBC Romania can be judged through the results derived by the Coca-Cola HBC Group. Romania had a major contribution that kept constant over the past few years, regarding the maintenance and improvement of the group's results. The market in Romania has numerous opportunities, as it is a dynamic market," stated Mugurel Radulescu, Public Affairs & Communications Manager with Coca-Cola HBC Romania.
Coca-Cola HBC Romania posted a 17 percent increase in the volume of sales last year, two times greater than in 2004. If the quantitative pace of growth is the same in terms of value, Coca-Cola HBC Romania's total sales could exceed 260 million euros for all of last year.

As a comparison, the turnover of Coca-Cola HBC Romania exceeded 220 million euros in 2004, according to Finance Ministry data.
The net profit posted by the Romanian subsidiary in the first 11 months of 2005, according to the Official Gazette, accounts for nearly 12 percent of the total profit of the Coca-Cola HBC Greece group.

The profit derived by Coca-Cola HBC Greece (the main shareholder of Coca-Cola HBC Romania) was nearly 320 million euros, 26 percent higher than in the previous year.
According to the official financial reports of the Greek group, the profit continued to grow in Romania, at the same pace as in the last few years, as a result of the large volume and revenues, given that costs maintained stable.
"Coca-Cola HBC Romania, as part of the global system, has created the possibility to permanently interact with other producers on the international market," Radulescu says.

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The Authority for the Recovery of State Assets (AVAS) wants to sell the 6.38 percent share it holds in Asirom on the stock exchange, even though the company's shareholders recently decided to withdraw the company's shares from the capital market.
The sale of Asirom shares is on AVAS' list of priorities regarding privatizations.
Investors wishing to leave Asirom shareholder's structure will receive 9.7 eurocents per share.
The last transaction with Asirom shares was performed on April 7, at a price of 17 eurocents per share.
This offered the company a stock exchange capitalization of almost 110 million euros.
Asirom is one of the most prominent insurance companies operating on the Romanian market.

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Burrow said Romania does not need a special law on lobbying, but a better implementation of existing legislation.

The European Institute in Romania yesterday hosted a debate on professional lobbying, aimed at eliminating suspicions over the concept and explaining it as a natural element of a democratic system.
"Lobbying is not something tricky or hard to understand," said Guy Burrow, the general manager of Central Europe Consulting Romania, who administered the debate. Burrow's company is one of the few in Romania specialized in public affairs and lobbying.
Burrow told government members, representatives of private companies and professional lobbyists present at the debate that lobbying should not be mistaken for activities carried out by interest groups.
The poor reputation of lobbyists is mainly caused by confusion with traffic of influence, a misunderstanding which has arisen on many occasions in Romania.
When considering lobbyists, many Romanians conjure up images of a businessman pulling the sleeve of a politician or handing him an envelope full of money under the table to convince him to change a law or to eliminate a set of rules in favor of an interest group.
Words like "lobby" and "interest groups" are frequently used with negative connotations by politicians and members of civil society, and there is frequent confusion between legitimate persuasion of decision-makers and traffic of influence.
Explaining that professional lobbying is a democratic right, Burrow said lobbying is the process of persuading decision makers in a transparent, professional and open way. Burrow founded a consulting company in 1992 to help foreign companies find their way through the maze of bureaucracy of the Romanian system.
However, in recent years, Romanian companies have also asked Burrow's company for help in their efforts to influence decision-makers in their favor. 
"In the last couple of years, more Romanian companies have recognized that they should improve their position through lobbying rather than making a quick phone call to the big guy," Burrow explained.
Asked about the possibility that a special law on lobbying being issued in Romania, Burrow said it is not the law that can change the mentality regarding lobbying, but this domain's professionalism.
"You can persuade people in a transparent and professional way or you can do it otherwise, like giving them an envelope full of money and say 'We need you to change this law, here is some money,'" he said.
Burrow urged people to understand that this can happen even if there is a law that stating that a 'politician has to register when they are meeting someone, like a businessman, for example.'
"That's not going to stop corruption. What the businessperson will say is 'I went to a meeting and I registered it.' There is nothing wrong with having a meeting; there is something wrong if he took money," Burrow explained.
Making people recognize lobbying as a legal and legitimate activity in a former communist country like Romania is not a piece of cake, especially because the concept has not yet met a high level of professionalism.
"Some improvement was seen in the last two to three years. (...)We are on the right track," said Burrow.

NGO to start public debate in favor of a lobbying law

Disagreeing with Burrow on whether a special law on lobbying is needed, the Pro Democracy Association (APD) announced they will start a debate this autumn over the sensitive issue.
APD head Cristian Pirvulescu believes the best solution to eliminate suspicions of corruption against both private groups and institutions would be a lobbying law.
"We remain the supporters of a lobby law because it would firstly assure a transparent relationship between politicians, mainly parliamentarians, and the interest groups in various fields of business," said the APD head.
At the core of the new law seems to be the obligation for lobbying firms to make their financial reports and meetings public.
"I believe the entire system would have something to gain through a lobby law and suspicions of corruption would be moderated if lobbying companies' reports are made public," said Pirvulescu.
If a lobbying law is issued, the fact there are no Romanian lobbying companies operating in Romania could change, according to Pirvulescu, who said the interests of Romanian companies could be better represented by Romanian lobbying companies than Western firms.
The APD's initiative has met resistance from other NGOs, from lobbyist and from some business associations, which have said that a lobbying law would not be appropriate at present because it might cover up a series of illegal practices of influence.
The head of Transparency International Romania, Victor Alistar, says a law on lobbying would lead to even more confusion on the subject.
"On the one hand, those who commit trafficking of influence would be able to say they are carrying out a legitimate lobbying activity. On the other hand, those who legitimately carry out lobbying activities would be accused of practicing trafficking of influence," Alistar explained.

Private sector representatives have different opinions

The Association of the Distributors and Importers of Medicine (ADIM) stated that such a law would restrict a citizen's right to contact the authorities in solving the problems they deal with.
"Lobby is done with arguments and traffic of influence with money and is punished by the Criminal Code," said ADIM executive director Ileana Niculescu, thus implying that a law regarding lobbying would be useless. 
She urged people to understand that lobbying is a legitimate activity, normal in any democratic country.
"Mistaking lobbying for traffic of influence compromises everybody's chances to inform those who lead us on the problems we are dealing with," Niculescu said.
ADIM's position regarding the need for a lobbying law is not shared by all business associations in Romania.
The representative of the National Union of Romanian Employers (UNPR), Nelu Neacsu, who also works as a lobbyist at the European Parliament, said a law on lobbying is necessary in Romania.
"The UNPR supports the request for lobbying activities in Romania to be settled through a law and the system of lobby to be based on decisions made in a transparent and efficient manner," said Neacsu.
The institution he works for represents the interests of more than 5,000 small and medium sized enterprises throughout the country.
Neacsu said it is mandatory for the lobby law to separate lobbying activity from traffic of influence for present misunderstandings to be eliminated.
"At present the lobbying activity in Romania is wrongfully perceived as traffic of influence. Recollections of a system in transition are still persistent in the public conscience. (...) For the law to be properly applied and for this field to properly work a change of mentality is needed," Neacsu said, urging nongovernmental organizations and public institutions to find a viable way of communicating.

Previous draft laws on lobbying rejected

In the last 15 years, there have been three proposals for a lobbying law and all have failed.
One of the initiators of such a proposal, former Social Democratic deputy Petre Naidin, said it is in the citizen's interest for a lobbying law to be issued.
"Besides the right to public information, what can the citizen do but address a qualified person who can develop the subject and present it to decision makers?" Naidin said.
"The public's reaction shows that in the absence of a legal framework, lobbying stays in the occult area of suspicions of corruption," said the deputy, adding that his colleagues failed to support his proposal.
However, Pirvulescu said the drafts were not helping the current situation, but worsening it.
"The proposals for a draft on lobbying were extremely dangerous because they restricted lobbying activity by trying to create a sort of corporation of a few privileged individuals," said the APD head.
Nevertheless, Alistar has yet another explanation for the drafts' rejection: the fear that they might increase the level of corruption by creating a cover for illegal activities. 
The various and even conflicting points of view on this issue demonstrate that the Romanian lobbying industry is trying to define itself; and the APD initiative this autumn of organizing debates on lobbying might shed some light over this complex and controversial subject.

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Laurentiu Badea, general manager of Carpati Motor Ltd

Romanians are increasingly receptive to qualities  such as low-emissions and safety, says Laurentiu Badea, the general manager of Carpati Motor Ltd., the sole distributor of Honda in Romania, which is a clear sign that the local market is about to reach maturity.  As head of the local subsidiary of a Japanese company that became the largest car exporter of the United States, Badea talked to Bucharest Daily News about his personal version of the 'Washington - London -Bucharest axis' and Honda Civic, the model that recently obtained the 'Car of the Year in Romania' award.
Badea says Japanese manufacturers won the battle for the domination of the world market some time ago. He explains it by a production process robotized at up to 90 percent, reducing costs to unprecedented levels, so that Japanese manufacturers are able to allocate funds to research and development that producers in other parts of the world cannot. This is how they manage to obtain more power from a regular engine than other producers do from turbo engines that cause more pollution, he explains. This is how the Japanese invasion started, blowing out the American competition on its own home ground.

Honda is a brand with a clear target consumer in the diversified global offer. From this point of view, what does the Honda owner look like?
The founder of the company, Soichiro Honda, was a real non-conformist in the automobile industry, an innovator by nature. This brand is associated with powerful people, with initiative, a category that appeared in our society after 1990, in the new social system open to business. People who have started doing business and want their success to be expressed by the car they drive. Honda is well known for its sport cars, individualist models with very special features, but the company is also a world leader as far as reliability is concerned. We use Formula 1 technologies, a sport in which Honda has made history.

Do you think that the Romanian market is as interested in such features as other markets?
The Romanian market is even more interested than others are, because it is so young. The percentage of people now attaining a certain social status is greater in Romania as compared to well-established Western societies. Therefore, this emerging group of people can be attracted to buy a Honda.

Therefore, you think that Honda is a sort of status symbol.
Well yes, in a way, but I would rather say it is a symbol of success.

Is Honda only a car for individuals or can it also be a corporate car? Do you outfit companies with entire 'auto fleets'?
We cover both aspects of the market. We have models for those who want a personalized car but also models that work very well for current business activities, including urban distribution. The reliability of Honda cars actually makes our utility cars perfect for such activities. With very low operating costs and a high safety grade it can be the dream of any employer concerned with the safety of his employees and the image of his business. The sport design can identify well with a particular brand.

Do you have a particular strategy for the expat segment of the market? They can be a very important part of your target public...
Not really, out company's policy is the same for everybody out there. Every one of our clients will leave our showroom with a product that offers the best quality to price ratio whether he is a local or a foreigner.

Why would someone buy Honda instead of any other car?
Of course, nowadays we can no longer say there are bad cars and good cars. All big producers and big players on the international market come with products of the best quality while tying to meet the customers' wishes and the trends on the market. There are fashions even in the auto segment. Nevertheless, Honda proposes a series of elements that individualize the brand. Our company is the inventor of the 'client satisfaction index,' an indicator that measures the technical incidents rate over a certain period of use. We offer a three-year guarantee, safety and a very specific feeling of driving a Honda. Honda's recommendation for its customers is to give up personal drivers because it is a car that deserves to be driven by its owner. After a stressful day of work, driving your Honda back home is a real pleasure. But besides that, at the corporate level, Honda is one of the 20 largest companies in the world. Among these top 20 businesses, only five are car manufacturers: Toyota, Mercedes-Benz, Chrysler, BMW and Honda. Honda has an 11percent share of the global car market. This should be considered in the context in which three large Japanese manufacturers hold 73 percent of the market: Toyota, Honda and Nissan. There are manufacturers, such as General Motors and Ford, which combined hold a 5.3 percent share of the market. That says a lot about this battle that Japanese manufacturers won a long time ago.

This brings me to my next question. After the Mitsubishi Colt won it last year, in 2006 the title of Car of the Year in Romania was awarded to Honda Civic. Do you think we can speak of a Japanese car fashion on the local market?
Not necessarily on the local market. It is a worldwide trend due to the exceptional quality of Japanese products, with regards to design, comfort, performance and operating costs. This has enabled Japanese cars to win many contests, which in Romania resulted in this title of Car of the Year. The same model is also Car of the Year in the United States and Canada. And on the North American market, where people are very fond of trucks, our model Ridgeline was awarded Truck of the Year. We could say that the famous "Washington-London-Bucharest axis" is already functioning, but we condensed it and changed its point of origin to Bucharest. I must add that at this point that the Civic is one of ten models competing in the final stage of the competition for the world Car of the Year title and I think it has a very good chance to win.

Assuming that it has one, what would be the influence of this award on your sales?
It probably has an influence, but it is more of a reward for those who made great efforts to design and create the product. And let's not forget the favorable publicity that the winner always gets, like in any competition, the winner gets great press coverage and all eyes are upon him.

Talking about cars in general, what distinguishes a Japanese car from an American or German one?
First of all, the most important elements are those that occur from the daily use of a car. In the case of Japanese cars, starting at a certain point, reliability became the essential component. In this highly competitive market, every manufacturer tried to reduce operational costs for their clients. Another thing that differentiates Japanese manufacturers, from their competitors, is the productivity of the fabrication process. Japanese producers' production lines are robotized at up to 90 percent, which allows them to offer high-quality at very low costs. This resulted in a distribution price much more accessible for clients. Another effect of the automation is that it frees up more financial resources for research and development. Consequently, Japanese manufacturers can come up with new and innovative technologies that allow superior performances. Japanese cars are known to have very powerful engines considering their low consumption. The Japanese automobile industry does not produce cars equipped with turbo engines. In spite of this, high research budgets have allowed them to obtain more power from a regular engine with air intake through vacuum, than other producers have from turbo engines. Honda, for instance, uses materials and subsystems of the best quality, which allows its cars to be used at very strenuous level, while offering the best reliability. Safety is also ensured by systems and devices taken directly from Formula 1 racing cars and installed on line-produced cars. Honda has been provided with such equipment since the early '90. At that point, Honda cars were obtaining four-star safety grades, while most producers were receiving only two or three. Other innovations were the special designs for child and pedestrian protection. In fact, the first car in the world to obtain three stars in the pedestrian-safety category was the old-model Honda Civic. These are all points that have been won by Japanese producers throughout the years, representing strategic advantages that have led to sales figures far superior to those of American or European brands. It is revealing that the best-selling car in America is the Honda Accord - on the home ground of Ford, Chrysler and General Motors. In fact, the largest car exporter in America is not Ford, nor Chrysler or General Motors, but Honda. Our factories in the United States are the producers of most American cars sold outside the US.

You say two of Honda's strengths are its advanced safety standard and low gas consumption. Do you think the local market is mature enough for these kinds of arguments?
I think it is very sensitive to the low consumption argument.

But what about the ecological aspect?
Well, young generations are very environmentally aware. There has been plenty of talk about climate change, the greenhouse effect, which formed a very powerful trend in favor of clean technologies. Our company was among the first to include this aspect in its philosophy. Honda created the first hybrid car, called ULEV, which stands for Ultra Low Emission Vehicle. The concentration of emissions from the exhaust pipe of this vehicle was lower than the quantity of emissions in the air we breathe every day. Every one of us thinks about the future of our children. Romania cannot just remain outside this trend.

After EU accession, the local market will have access to high-quality, secondhand cars. What will be, in your opinion, the influence of this on the new car market?
I am not sure we can speak about quality secondhand...

They can be Hondas, two or three years old...
This is true, they can be Honda, but we had a similar experience in the early 90s when everybody bought secondhand cars in Western Europe, but unfortunately, they were extremely used.

I'm talking more about the kind sold by specialized dealers who provide technical and moral guarantees.
Of course, what will enter, through specialized dealers who have already emerged along with the growth of the local market, will be part of a secondhand segment belonging to the same market. Clients who buy a car may want to sell it and get a new one after a couple of years, so importers themselves will have to come up with a system that would ensure a platform for this secondhand market, in which cars will be checked and receive a history record. We are not scared about it; it is only normal and comes with the market reaching a certain maturity. On the contrary, it can lead to the increase of new car sales at the same time with their introduction on the secondhand circuit after a while. Considering the experience of other countries such as Poland, it also depends, of course, on the government's initiative. In Poland, after the opening of the market, many people rushed abroad and bought old, polluting cars. We are supporters of maintaining a certain standard in Romania.

This almost answers my last question about how you prepared for this...
For this new step in the development of the local market, we consider it our duty to create a parallel structure for the secondhand segment. We will implement a buy-back system, ensure the technical inspection of the car, replace certain parts, and prepare it to be resold with a reasonable warranty. This structure involves not only developing the system but recruiting the qualified personnel. It will involve new investments, new jobs, so everybody will be happy with it.

Honda was known at first as a motorcycle manufacturer. How is this segment doing in Romania?
That is right. In fact, the whole Honda adventure started with a small shop that produced spare parts for Toyota. From that, it went to equipping bicycles with small engines at a time when Japan was in great need of means of transportation. The first car, the Civic, was produced in 1972, and here we are 30 years later. For comparison, think about the fact that Dacia produced its first automobile two years before Honda, back in 1970. And look where they are now and where Honda is. Determination makes all the difference in the world.

That and completely different economic and historical conditions...
That is also true, but I still think that most important is the human factor. To come back to motorcycles, all I can tell you is that Honda is the world leader on this segment. But our policy is that the three main areas of activity are separated in three completely independent branches: cars, motorcycles and power equipment. And Honda Romania only deals in cars so I can't tell you more about motorcycles.

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ANIMMC President Ovidiu Chirovici says local SMEs are either prepared for EU accession or not affected by it.

The growing Euro-skepticism among the representatives of small and medium enterprises (SMEs) is not justified, according to Eugen Chirovici, the president of the National Agency for SMEs and Cooperation (ANIMMC).

In recent months, all kind of speculations have been made on the number of SMEs that would go bankrupt after Romania's entry in the unified European market, some voices suggesting absurd figures like 40 or even 60 percent, Chirovici said yesterday in a press conference. The official supported his assertion with statistics, according to which 60 percent of the total number of Romanian SMEs activated in interior trade, most of them being small stores. About 25 percent of them were active in services and only 15 percent were involved in production activities. "For those in the first category, January 1 2007 will only mean the day after the New Year," Chirovici affirmed, adding that the only factor that could put them out of business was the expansion of the big hypermarket networks. These companies are already compliant with European standards so this is the least of their worries, argued the ANIMMC president.
For service providers things were not much different, with the exception of those who needed to invest in the improvement of their environmental standards. But these investments were not considerable, said the official.

As for companies with production activities, things are more complicated, especially in the case of food processors, he admitted, because in this field, European norms are particularly severe. The sector needs significant investments because at present they would definitely deserve a 'red flag', said the ANIMMC head. In addition, the experience of countries that joined the EU during the last enlargement wave, such as Hungary, shows that after the accession 80 percent of canned food producers were put out of business. Yet these 80 percent had a market share of less than ten percent.
Chirovici estimates that the Ministry of Agriculture has done its job, as each entrepreneur was informed in writing of problems and ways in which they could be fixed. Of course, whether the investor does anything, or just waits and sees what happens, is his decision, continued Chirovici.

"In any country, there is a ratio between emerging and disappearing SMEs. I do not want to sound euphoric but there is really no serious reason to believe that ratio would change after the accession to the EU," said Chirovici. The official added that 80 percent of the exports carried out by SMEs are sent to EU countries. The EU market is not unfamiliar to local companies; on the contrary, this is the trade destination with the best import-export balance, argued the official.
ANIMMC has organized a series of seminars for the discussion of concrete cases where participants were able to find out exactly what had to be done to attain full EU compliance, said the government agency's director. ANIMMC will also publish a series of brochures for investors and trained specialists in the implementation of programs.

Chirivici referred to the proposal made by certain members in the administration regarding the union of the three government bodies with attributions in the organization of the business environment: ANIMMC, the Romanian Agency for Foreign Investments (ARIS) and the Business Environment Department of the Ministry of Economy and Trade (MEC). In mature economies, the best job producers are SMEs, not large corporations who usually relocate to low-wage labor markets such as China, Ukraine or Romania. In the perspective of Romania becoming a mature market itself, and considering that bodies like ARIS deal only with investments of over one million dollars, the merger of the institutions would be inappropriate. The two bodies have dissimilar objects of activity, concluded the ANIMMC head, adding that he pleaded for the strengthening of the institution's role. "There is a discrepancy between the expectations of SMEs and the actual financial and human resources of ANIMMC," said Chirovici. In small towns where the communist industries have collapsed, a 200,000 euro foreign investment in a shop that puts five or ten people to work means a lot. Presently, nobody takes care of this kind of investor. Chirovici acknowledged that the biggest problems of foreign SMEs that appear in Romania are bureaucracy and the corruption of local authorities.  "We asked the prime minister for the authorization to set up a consulting agency that would support these investors in their relations with the authorities, by mediating the elaboration of the paperwork. No public servant will ask another public servant for bribery," said the official.

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Alcatel Romania has become a regional coordination center for the Southeastern European branches of the French group starting April 2006, according to a company statement.
Sources within the company have mentioned that the Romanian branch will coordinate management and sales activities for ten Alcatel subsidiaries in the region.
Established in 1991, Alcatel Romania represents one of the most important suppliers of telecommunication equipment for the Romanian market.
Its main headquarters is located in Timisoara, the company having 1,000 employees and a 140 million euro turnover in 2004, according to the data provided by Alcatel Romania representatives.

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Bucharest Court of Appeal will make public its decision today in the legal suit involving Carpatcement Holding which contested the nine million euros fine received from the Competition Council.
The latter institution established that Carpatcement participated in a cartel that illegally established cement prices on the Romanian market.
In May 2005 the Competition Council fined cement producers Carpatcement, Lafarge and Holcim with total fines amounting to 28 million euros.
All the three companies attacked the decision in court. Carpatcement said that the investigation launched by the Competition Council was based on facts that were not supported by evidence.

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2006 will be the year of constructions in Romania, according to a survey by CB Richard Ellis, which explains the upward evolution of the market of construction materials that does not seem to be affected by the price increases of specific materials, which could reach up to 10 percent of the current value, following the successive increases in the prices of fuel, ACT Media news agency reports.

Being the largest consumer of cement from the overall output, the sector of civil constructions accounts for over 60 percent of the cement trade.

The demand for cement is on the rise, with an annual growth pace of 3-5 percent, mainly in the bulk cement sector.

The cement market accounts at present 6 percent of the total of construction market, sources at Carpatcement said.

In Romania, there are nine cement plants owned by three companies: Lafarge Romcim holds plants in Medgidia, Hoghiz and Targu-Jiu; Holcim holds the plants in Turda, Alesd and Campulung; Carpatcement owns the plants in Bicaz, Deva and Fieni.

However, a new player has entered the market recently, namely one of the biggest Turkish companies, Sabaci Holding, which belongs to cement manufacturer Cimsa.

Related to the other construction materials it seems the prices will be influenced as of this spring by the increase in the price of natural gas and electricity.

For example at the production of reinforcing, cement and concrete the consumption of electricity and natural gas is higher, unlike the wood products where the quantum is lower.

The prices of cement, reinforced concrete, PVC profiles, double glazing, and even timber will go up by 8-10 percent, according to experts in the field.

Price increases are expected also when it comes to metallic systems bound for civil or industrial constructions.

The increases in the prices for construction materials could trigger a 5 up to 10 percent growth at most in the price for built square metre.

The average prices of the market of construction materials presently are as follows: concrete - about 2 million ROL per cubic metre; reinforced concrete - about 22,000 ROL per kilogram; porotherm brick - around 2.5-2.7 million lei per cubic metre.

Furnishings market is expected to see a spectacular growth. The market of roofing systems registered last year sales worth over 10 million of square metres, up as against 8.9 million square metres in 2004.

Accessories account for about 30 percent of the total. Activating on this segment are about 500 producers of 20 Romanian cities. The sales of PVC profiles and double glazing increased in 2005 by 25 percent compared to the previous year, reaching about 700 million euros, show the studies conducted by Neomar Consulting, a company specializing in marketing research.

Meanwhile, the wood houses have emerged on the Romanian market, although this kind of buildings haven't been so successful in Romania, excepting as holiday residency at the most, because people prefer classic materials (brick or prefabricates) which they consider much more resistant.

However the wood constructions are a cheaper alternative to brick buildings, with prices per built square metres ranging between 100 and 4000 euros, depending on materials.

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The BitDefender division of the Romanian company Softwin entered into a partnership of distribution for the Bulgarian market with Tornado Sistems Bulgaria, a release of the company informed, ACT Media news agency reports.


All BitDefender solutions are available on the Bulgarian market from March 2006, through Tornado Sistems Bulgaria, a subsidiary of Tornado Sistems, a company set up in 1991, in Romania.

BitDefender intends to become in two years one of the main suppliers of IT security solutions in Bulgaria.

The users from this country will benefit from non-stop technical support, and in the near future, the products will also be available in the Bulgarian language.

Tornado's subsidiary, opened in 1999, is at present one of the famous IT solutions suppliers on the Bulgarian market, having partnership relations with over 500 active resellers.

Starting in February, BitDefender Co. has a team for Eastern Europe.

Bulgaria is one of the countries under continuous development, with an increased market potential, resembling Romania in this respect.

According to BitDefender's estimates, in 2006 the anti-virus market in Bulgaria will exceed 5.7 million dollars.

The piracy rate is high in Bulgaria, like in Romania, exceeding 70 percent, but the IT field is more and more dynamic. At the end of 2005, the Internet penetration rate was of 28.5 percent (as compared to 23.2 percent in Romania), and in the last few years, the PC market registered a 26 percent growth, while the software market increased by 12 percent.

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The European Commission approved the re-allotment of 168.9 million euros from SAPARD funds for the rehabilitation of the infrastructure damaged by floods in 2005, the Ministry of Agriculture, Forests and Rural Development informed, ACT Media news agency reports.

The Romanian authorities requested this re-allotment in the summer of 2005, and the decision of the European Commission was approved on April 11, 2006.

Thus, the sum will be invested in the infrastructure damaged by last year's floods, as well as in creating new infrastructure for flood prevention and protection against floods.

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Greek ink and industrial paints produceR and wholesaler Druckfarben said that it plans to invest 11.5 mln eur to upgrade and expand production facilities over the next 3 years.

The company said that it will invest 6.5 mln eur to establish a paints factory in Aspropyrgos outside of Athens that will have the capacity to supply the Greek, Bulgarian and Serbian market. By the end of July this year the paint factory it is currently building in Bucharest, Romania should also be completed after a total investment of 3.5 mln eur, Druckfarben said.

The company added that it is eyeing the Egyptian and Turkish market for expansion opportunities and that it is also focusing on expanding strategic cooperation with Germanys Hubner Group which controls 10 pct of its outstanding shares.

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Romania's Capital, Bucharest, is further attracting the biggest investments in the IT sector, "heavy" players such as IBM, Amazon, Oracle, Hewlett-Packard already opening their centers in Bucharest, announcing at the same time they intend to invest in Romania hundreds of millions of euros for hard or soft production, weekly Capital review reports in the latest issue, ACT Media news agency reports.


From data of the Employers' Association of Software and Services Industry (ANIS) in a Top 5 of Romania's cities that "spin" the highest amounts of money in this field, following Bucharest, there are in this order: Timisoara, Cluj, Iasi and Brasov. Bucharest ranks first, given its bigger active population that led to a higher number of companies.

Moreover, the Capital has the trump card of being a strong University center, therefore capable to produce a qualified workforce for the big IT companies and this constitutes a "magnet" for foreign companies in the field that come and open development centers in Romania, Sebastian Ungureanu, system administrator of Synygy Co., explained.

The most significant University centers in Romania, such as Timisoara or Iasi, have become on their own turn, in the recent years, reference locations for the respective international companies.

The reason is small production costs, reduced in comparison with Bucharest.

As well, the profile faculties from Iasi produce each year, on "the band", graduates in their hundreds and, according to IT companies representatives, at least 10 percent of them are exceptionally trained.

The east of the country has also become attractive for the big companies in the field because the companies that opened work units in Timisoara or Cluj already absorbed the workforce in the field.

For instance, Alcatel and Siemens development centers opened in Timisoara virtually absorbed all available resources. Romanian IT specialists are working hard to find solutions for these foreign companies.

As such, according to data supplied by the big companies, the greatest part of soft or hard production - in excess of 95 percent to be exact - is carried out for these foreign companies.

Wages paid in the IT field in Romania are at least three-fold smaller compared to Europe.

If a programmer is paid in Romania with 1,000 euros, abroad, more exactly in a European Union country, his or her wage would start from 3,000 euros or even more, maybe double, Gabriel Mardarasevici, Director general of Ness Romania, pointed out.

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The Romanian Chamber of Trade and Industry (CCIR) hosted a series of meetings with representatives of a delegation from China, which voiced its interest to start a collaboration in the construction field, Bursa reports.


Chinese investors plan to get involved in several fields of the Romanian economy and complete projects in the infrastructure and civil construction.

This would lead to the expansion of the business potential, according to Chi Changhai, head of the Chinese delegation.

Debates also focus on political matters, the legal framework and real commercial conditions, projects that are in different stages of development and opportunities in upgrading road and railroad infrastructure, build of housing units and industrial premises.

Starting from major projects, such as the Bucharest ring-road or the bridge from Macin, an agreement between the to parties could provide support in finding companies that want to participate in such projects and finances to carry them to completion.

"The rapid growth of the two economies brings forth real perspectives for international collaboration in the construction field, where Chines companies posted a turnover of 21.76 billion RON," Chi Changai added stating that Chinese companies could start in Romania with the construction of bridged, harbors and houses.

Representatives of Chinese companies were informed on the "Casa Yacht" project, which will be developed in Romania by IPA SA.

The concept combines luxury residences, with the comfort and safety of houses and the free movement one has while at sea," said Dorian Chelaru, head of IPA.

Currently, there are over 9,000 Chinese companies with activities in Romania.

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With only seven private hospitals opened in the last 12 years, the construction of the private hospitals in Romania advances at a still slothful pace, writes the Capital magazine in this week's issue. With investments ranging between two and ten million euros per unit, private hospitals are making their way towards Romanian patients, whereas their promoters hope to recover their investments in about two years. Mihai Grigore, marketing manager with Munposan 94, a hospital commissioned in Bucharest in 1994, says the occupancy rate is 70 - 75 percent. In one year the company had 1,000 patients in average and performed 700 surgery interventions. Grigore says 98 percent of the patients fully cover their expenditures.

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Competition among Romania's four mobile phone operators is getting higher by the day, with coverage expansion, the release of new services and price cuts being the key-elements in their strategies of late. Orange Romania is said to have announced expanding its EDG coverage to include all of Romania's 41 county cities and the Black Sea resorts. Among the latest video service offer of the company is the live reception of three TV channels as well as of recorded TV shows, concerts, live soccer matches, near-live broadcast clips from UEFA Champions League and Division A matches and news. In some weeks' time, the Connex brand will disappear, to be replaced by Vodafone, after six months of coexistence.

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French hotel chain Accor, one of the biggest in the world, intends to enter Romanian market with Etap brand, at the 2-star level, informs Ziarul financiar, which quotes Bruno Vinette, director general of Sofitel Hotel in Bucharest, which is part of Accor chain. "We will have an Etap in Rumania by 2007", says Vinette. According to him, Accor is searching a hotel in Bucharest or in province to take over in the coming period. The profile of the client of such a hotel is a person whose incomes are low and average, since the tariffs charged are some 25 - 30 euros per night.

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AutoItalia Group that imports car makes Fiat, Alfa Romeo, Lancia, Maserati, Ssang Yong and Honda recorded a 31 percent increase in car sales in three months of 2006 up to 1,552 units compared to the same period a year ago. The fastest rise was posted by Fiat Punto model that saw its sales surge 86 percent from last year, while Fiat Doblo Panorama boosted sales 50 percent.Overall, Fiat Automobile grew 30 percent. Fiat Light Commercial Vehicles Division stays on an upward trend, having climbed 29 percent overall, while Ducato models posted a more than 50 percent surge. Sales of Alfa Romeo went up 39 percent. AutoItalia Group will launch this year the models Fiat Albea FL, Grande Punto, the new Fiat Stilo, Alfa 159 SW, Alfa Spider, Alfa Brera and SsangYong Action.

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The Spanish real estate companies bought lately terrains in Bucharest and in other big cities in order to develop real estate projects, daily Ziarul Financiar informs . Besides Riofisa, HI Grupo, Grupo I, Fadesa and Agofer, the Spanish companies Hercesa, Prasa and Invarsa announced real estate projects on a market dominated by Austrian, Greek and Israeli players."The Spanish investors are interested in Romanian market's potential in comparison with the Spanish market. The local market resembles to the Spanish market of 15 years ago, when the real estate development began," says Alejandro Solano, director of Romanian operations of Hercesa Immobiliaria. Hercesa will build a housing complex with 1,600 apartments on Basarabia Avenue and will restore the former Cismigiu Hotel, a project estimated at 6-7 million euro.

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Greek Sephora Marinopoulos Co. opened a new shop in Bucharest and is about to open another one in Constanta (250 km east of Bucharest). The new Sephora shop is placed in the Feeria Shopping Center, in the Baneasa area of Bucharest, the largest shopping center in the Central and Eastern Europe."We have invested one million euros in the shop in Feeria complex and some 800,000 in the one in Constanta, which is going to be smaller," Sergios Betchavas, country manager of the Greek company said, also highlighting that Sephora intends to double its network of shops by the end of the year, from five to ten units. The company, which holds the franchise on the Romanian market for the Beauty Shop and Sephora stores, posted some 10 million euros in turnover last year and budgeted an increase by 20 percent for 2006

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As many as 258 bridges in Romania will be rebuilt or modernized between 2006 - 2008, Minister of Transport, Constructions and Tourism Gheorghe Dobre said. "A program will unfold between 2006 - 2008, consisting of the rehabilitation of 258 bridges, of which some will also be in for modernization. The bridges the repair interval of which has expired represent 90 percent. It is very difficult to see to the necessary works after the repair interval has run out, because maintenance works were not duly performed. And the costs are higher too. Between 2000 - 2004 there was no concern to remedy the situation because it is easier to do some scamp work with road paving that will not resist in time anyway, rather than see to the safety and security elements in transports, and bridges are such important elements," said Dobre,quoted by Rompres.

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The high yields on the Romanian real estate market are expected to kick off an investment boom in the sector, that might reach one billion euros, reveals a study carried out by real estate company Eurisko, ACT Media news agency reports.


The upward trend of the market will continue in the following years on all segments: residential, commercial, office and industrial space, assert the representatives of the company that authored the survey.

"Last year, real estate investments proved to be among the most profitable in the entire Romanian economy," said Eurisko Research Coordinator Luiza Munteanu, whose statement is confirmed by the data provided by the Ministry of Public Finance, according to which, in the last seven months of 2005, real estate transactions produced profits worth 250 million euros. Bucharest, Romania's Capital, will this year remain leader in the preferences of the major estate investors, whereas the segment with the highest potential is that of office buildings, a still undersized market in comparison with Hungary, the Czech Republic or Poland, read the Eurisko study.

According to forecasts, in the next two years the offer will grow by a higher rate than demand, both for office rental and sale.

As for the residential sector, the previous year marked a re-directing of the offer towards the middle class represented by people with monthly incomes between 600 and 1,200 euros. According to the study, the offer of residential space in Bucharest will rise dramatically in 2006, diversifying the housing alternatives for the middle and top class.

Large investments are also expected this year on the segment of commercial space, following the entry of large store chains like Real, Spar, Auchan and the expansion of already present ones. On the industrial segment the offer will enrich this year with logistics space totalling 156,000 sq.m., whereas monthly rents will decrease slightly towards 4.5 - 4.8 euros per sq.m., estimate the Eurisko representatives. The areas outside the Capital will also be attractive for estate investors.

Thus, the City Business Centre, the first complex of A-class office buildings, will be completed in 2007 in the western city of Timisoara.

The first building will cover a built area of 10,000 sq.m. and will require investments worth eight million euros.

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Andami plans to expand its real estate activity in Bucharest and in other regions of the country and estimates an increase of the turnover by 40 percent this year. According to the company's general director Adrian Mircioiu, the company has started in 2005 the construction of a residential complex worth six million euros in Corbeanca near Bucharest. Recently the company acquired another 3.5 hectares land plot close to the first project, for the construction of 50 villas.

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The Prod-Veg-Am-Terra company will invest 15 million euros in a new commercial center in the Salajan area, on the site of the current Titan market place. All buildings in the Titan market will be demolished and replaced by Damian Mall, a 26,000 square meters retail center surrounded by an area where current food vendors might continue their activity. 14,000 square meters will be leased to retailers, such as the Spar supermarket, Diverta, Flanco and Domo. The project should be complete by the end of 2007. The company announced a similar 15 million euros project in Deva.

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The German company HeidelbergCement estimates for its Romanian branch Carpatcement an increase of the turnover to 213 million euros, over the 194 million obtained last year. According to Carpatcement representatives, the 10% growth would be due to the increase of the local cement market and the expansion of the company's production facilities network. The German group also plans to invest 25 million euros, mostly in installations running on alternatives fuels, the modernization of the Fieni factory and environment protection.

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British company Cordea Savills won the bidding organized by the Proprietatea Fund for the selecting of a strategic consultant. The consultant's mission is to draw up the investment strategy of the fund.

The company is part of the Savills group, one of the most renowned international companies in the properties sector, with a nominal capital of 850 million pounds. Citigroup, Nabarro Wells & Co Limited, Forex Invest Online LLC, Reyl & Cie (France) SAS and the Frank Russell Company also took part in the bidding. According to the president of the Fund's Supervisory Council, Nicolae Ivan, the bidding for the selection of the fund's administrator will be organized around May 15.

Law firm Allen & Overy has been already selected as the fund's legal consultant. The Proprietatea Fund has a portfolio of 114 stakes in Romanian companies and a nominal capital of 3.9 billion euros, which could increase if retrocession requests surpass expectations. The fund was created in 2005 as a solution for compensating former owners dispossessed by the communist regime who cannot receive their actual properties.

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SIF Muntenia, the top profit maker among the financial investment companies (SIF) after the first two months of the year, registered a decline by 6.5 million RON (1.8 million euros) in net income obtained at the end of March.

Piraeus Bank will increase its share capital by up to 25 million euros, with the final amount to be decided at the General Meeting of Shareholders, which will take place on April 27.

The European division of Israeli construction group BSR and the BSG Company will invest approximately 65 million euros in a residential project in Bucharest, according to the online edition of Globes. The two companies announced they would equally contribute to the purchase of a 40,000 square meters lot. The sellers will receive 12 percent of future revenues but no less than six million euros. The real estate project will include 1,000 dwellings with a total surface of 105,000 square meters. Preliminary costs are estimated at 65 million euros and the project should be finalized by the end of 2009. About 30 percent of the homes will be sold in advance while the rest are to be sold during construction works. This is the third joint real estate project of the two investors in Romania, Baneasa Office Building being one of them. BSR Europe is active in Central and Eastern Europe and has operations in the Czech Republic, Slovakia, Poland, Hungary, Lithuania, Romania, Bulgaria and Cyprus. The company is involved in 23 real estate projects, administering assets of over 550 million euros.

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The Eurolines group has budgeted turnover standing at 27 million euros for this year, approximately 8% higher than the value posted last year, stated Dragos Anastasiu, general manager of the company and one of the two stakeholders in the group of firms.

The Energy Financing Team Limited Group, a Central and Southeastern European energy provider announced on Monday it will allocate 100 million euros for a Greenfield investment in Romania, after weighing the opportunities offered by existing facilities. The company was attracted by the hydroelectric energy sector, which has not reached its full potential yet. "Romania has an unmatched potential in the region as a point of commerce and for the development of new energy facilities" believed the director of the group, James Nye.

The regional market will change significantly in the years to come but Romania should keep the advantage of being a net exporter of energy. EFT invested 40 million euros in Bosnia and Herzegovina so far and also plans to build a 400 MW thermo central. Nye explained that besides Bosnia, "Romania offers by far the best environment for investment in energy production facilities." EFT Romania SRL, a subsidiary of the EFT Group was acknowledged last year as an energy provider in Romania after the group had been intermediating export contracts for energy provided by Hidroelectrica since 2001. In 2005, the group's turnover was more than 420 million euros.

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Astra refinery from Ploiesti had a 660,000 euro profit in 2005, while in 2004 the company registered a loss of around 575,000 euros. However, turnover has decreased dramatically from over 70 million euros in 2004 to less than 4.5 million euros in 2005.
The financial information was approved Friday in the General Assembly of Shareholders.
For 2006, Astra estimates total revenues of 1.6 million euros and expenses of 3.8 million euros, estimating a loss of 2.2 million euros.

The refinery's shareholders decided in October 2004, that production would be stopped and the company would enter into a state of safeguarding and investment and economic-financial restructuring in accordance with the evolution of the oil price.
The main shareholders of Astra Romana Ploiesti are: the insurance company Asirom (21.89%) and the investment funds Kreyton (47.45%) and Broadhurst Investment (17.37%).

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The Romanian agricultural equipment market is currently underdeveloped as there is a significant lag behind the EU level of mechanization. In the coming years, the Romanian and Bulgarian markets will profit from EU accession and the subsequent inflow of foreign investments, believes Cristian Fader, director of investment with the Dutch fund Middle Europe Investments Roemenie en Bulgarije Fonds (MEI- RBF). The group will allocate about 22 million euros for acquisitions on the Romanian capital market, accounting for 75 percent of the funds collected through a public subscription on the Euronext Exchange. The remaining 25 percent will target Bulgaria.

The distribution of investments on each capital market was established taking into account capitalization and the volume of transactions. By the end of March, the company had accumulated 29.2 million euros. "The fund is open, and the growth rate of the number of fund units will reveal investor interest for Romanian and Bulgarian markets," said Fader. The first investment in Romania was the purchase at the beginning of April, of a 5.23 percent stake in forestry and agricultural equipment manufacturer Mecanica Ceahlau. The shares were purchased at a price of 6.9 lei, close to the market price. Company policy stipulates that at least 50 percent of funds be invested in stocks included on the BET and SOFIX indexes and the remaining amounts into stakes in small and medium enterprises, but no more than 15 percent of the fund's value may be invested in any one company. MEI has been present on the Central European market since 1991 and coordinates 12 subsidiaries in nine countries in the region.

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The Ministry of Public Finance decided to supplement expenditures and increase revenues.

The general consolidated budget deficit will increase from 0.5% to 0.9% in the Gross Domestic Product (GDP), after supplementing expenditures by 945 million euros and increasing revenues by 576 million euros (0.6% of the GDP), according to the budgetary rectification project issued by the Ministry of Public Finance (MFP).

A third of the proposed sums represent capital expenditures, while 260 million euros will be allotted for goods and services.
The investments of the economic agents with state capital will be supplemented by 97 million euros and the social assistance programs receive 91 million euros.
The project includes expenditures made for personnel a 65 million euros increase, mainly for covering the salary differences between October 2001 and September 2004, of the teachers from the state education system.
The budgetary reserve fund made available for the government will receive supplementary funds amounting to 71 million euros. The money allotted in the budgetary rectification is mostly for projects and investment programs. The greatest beneficiary is the Ministry of Transportations, Constructions and Tourism with 168 million euros. Others include the Ministry of Education and Research received 102 million euros, Ministry of Environment 86 million euros and the Ministry of Administration and Interior 76 million euros. A series of supplementary expenditures were proposed for the Ministry of Labor (57 million euros), the Ministry of National Defense (35 million euros) and the Ministry of Economy and Commerce (30 million euros).
MFP estimated that the value-added tax (VAT) should bring 253 million euros while the taxes on salaries and revenues should bring an additional 128 million euros.
The ministry lowered the estimates for the revenues brought by the excise tax and the taxes on micro-enterprises.
The 2005 budget deficit was of 0.8% of the Gross Domestic Product (GDP) and under the 1% level established by the public authorities in the last budgetary rectification, according to the preliminary data transmitted on yesterday by the Ministry of Public Finance (MFP). The budgetary revenues represented 29.7% of the GDP, same as 2004, but the expenditures represented 30.5% of the GDP. Revenues coming from the VAT showed a positive 1.1% GDP increase while the profit tax revenues decreased by 0.4%.

Trade deficit hiked

Romania reported in the first two months of this year a trade deficit of 1.4 billion euros, up 56 percent compared with the same period in 2005, after maintaining high import levels, according to data issued by the National Statistics Institute (INS).
The value of imports increased by 30 percent during January and February, to 5.3 billion euros while exports advanced by 22.5 percent, to 3.9 billion euros.
Significant import hikes were reported in mineral products and transportation goods.
Iuliu Winkler, the delegate minister for trade, stated in mid-March that despite an estimated 15 percent increase of exports, 2006 will be another year of trade deficit.
The minister said that one of the causes for the deficit was the massive import of technology, a result of investments in the economy.
Other factors are an increase of consumption that internal productions cannot fully cover and imports of oil products and natural gas.
The trade deficit of food products attained 121 million euros in the first month of the year, 52.9 percent more than January 2005, as imports grew to 159.7 million euros. In this period, imports increased by 40.1 percent over the same month of the previous year, while exports advanced by only 13.2 percent.
For 2004, BNR revised both the current account deficit (from 1.24 to 1.43 billion euros) and the GDP (from 67.5 to 69.42 billion euros, at yesterday's exchange rates).
According to data from the National Statistics Institute (INS), the current account deficit progressed last year by 8.7 percent, an 8.4 advance than the year before.
Winkler estimated the value of trade exchanges in 2006 to 70 billion euros.
Romanian companies will be encouraged to participate in as many international fairs and exhibitions as possible in order to stimulate exports, said the official. The number of external trade representatives will increase from 110 to 130 informed the government's official. "We will focus on the geographical area that corresponds to Romania's geopolitical interests, namely the extended Black Sea basin in particular," explained Winkler.

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The sales of new cars on the Romanian market increased in the first quarter of 2006 by 4.1 percent compared to the same period of 2005, reaching 50,260 units according to the data presented Monday by the Association of Car Producers and Importers (APIA).
The demand for models produced in Romania decreased in the period by over 17% to 25,253 units sold, while the sales of imported cars went up by 40.4% reaching 25,007 units.
Automobile Dacia controls 42.7% of the new car market with 21,441 units sold, while Daewoo Automobile Romania has a 7.6% market share, selling 3,812 units.
As for the sales of imported cars, Skoda is first with an increase of 64% to 3,967 units sold, surpassing Renault, which reported a one percent increase with 3,664 units sold.

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Public Finance Minister Sebastian Vladescu reaffirmed one day after the Senate passed a legislative proposal of the Conservative Party (PC) regarding a cut in the VAT on basic foodstuff from 19 to 9 percent the position of the Finance Ministry that it is better to keep a stable taxation system for now, ACT Media news agency reports.


"We already have a taxation system and we want to keep it stable.

I have offered an advantage to the citizens and corporations alike through the flat tax with a lower level compared with the other European countries.'

This advantage of the flat tax allowed the citizens to keep more money in their pockets, which raised criticism from the Monetary Fund, the European Commission and even from some internal quarters.

Thus, instead of reducing the charges on some products, we left citizens more money to give them the possibility to consume more," Vladescu said.

The minister also explained that the amount of the resulting savings is standing at 1 billion euro.

"What some try to do now, in a manner which to me seems petty politics, has nothing to do with the economic strategies or with our effective attempt to support people.

The measure will not have the expected results.

Our experiences shows that the products become cheaper only at a first stage, after which the prices come to the initial level or even exceed it.

For instance, if someone sells the bread for 100 lei and a 19 percent VAT, it will be selling it with 100 lei and a 9 percent VAT after the reduction we are talking about," he warned.

Vladescu thinks no company will renounce that difference in the profit and concluded this is not the moment for such a reduction.

"We already have a taxation system offering an advantage to the people, so we should keep the VAT level as it is," Vladescu said.

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The companies that could promote the program "Sibiu - European Cultural Capital 2007" are too expensive, Gardianul writes in today's issue.

Two companies entered the tender, each asking for about three million euros, a figure which is too high for the resources of the Culture Ministry. "The exaggerated financial demands" of the two companies that submitted offers for the appointment of the company to deal with the promotion of the program "Sibiu - European Cultural Capital 2007" have prompted the representatives of the Culture Ministry to annul the first round of the competition. In the selection contest two offers were received, submitted by Chelgate Limited and Publicis SRL. The Culture Ministry cancelled the tender because the financial demands of the two companies were "exaggerated," far surpassing far the financial possibilities of the ministry for the campaign to promote the program. "We have cancelled the procedure, we will restart the bidding, because the two companies greatly surpassed our budget," said Sergiu Nistor, the commissioner of the "Sibiu 2007" program, quoted by Mediafax. He also announced that the Official Register will publish the new offer at the beginning of this week.
The members of the commission that evaluated the two offers unanimously agreed with this solution and said that restarting proceedings could bring even better offers.
That does not mean the two companies who had already filed offers cannot come with better ones to the new tender, Sergiu Nistor added.

Among the members of the specialized commission selected by the Ministry of Culture are: Dumitru Bortun, president of the Romanian Association of Public Relations Professionals, analyst Emil Hurezeanu, Oana Gavril, adviser within the Agency for Government Strategies, Carmen Croitoru, independent expert, and Bujor Alecu, secretary of the commission.
The president of the commission, Dumitru Bortun, said the offers of the two companies "were not perfect" and the funds they had asked for amounted to about 3 million euros. "We, the commission, finally chose one of the offers, but the minister said 'no'," Bortun said.

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Spacecom Satellite Communications will provide more segments from its Amos communications satellites.

Spacecom Satellite Communications Ltd. (TASE:SCC), which operates Israel?s Amos civilian communications satellites, yesterday announced that it was deepening its business ties with satellite operator DTH Romania, controlled by Freddi Robinson?s Miloumor Ltd. (TASE: MILO) and the Dankner familiy?s Elran Investments Ltd. (TASE: ELIN). The parties revised an existing contract, which includes exercising an option for setting up direct broadcast satellite (DBS) multi-channel television.

Under the new contract, DTH Romania will buy an addition segment from the Amos 2 satellite for the provision of 18 channels, in addition to the two segments it already buys. DTH Romania also agreed to buy an additional segment from the Amos 3 satellite when it becomes operational in June 2008. The company also agreed to extend its contract with Spacecom through 2020, and postpone payment for the first half of 2006 to the second half of the year.

Spacecom has revised upwards its multi-year revenue from the revised contract with DTH Romania from $34 million to $90 million. Spacecom added that $11 million of this amount will be paid over the next three years, instead of $8 million under the previous contract.

Spacecom and the Israeli government are due to jointly initiate the Amos 4 satellite as a platform to enter Asian markets. Amos 4 is scheduled for launch in 2010. The Amos 3 is due to replace the aging Amos 1 in mid-2008.

Spacecom has a market cap of NIS 310 million. The company posted NIS 157.3 million revenue in 2005, 64% more than in 2004, but posted a net loss of NIS 8.3 million in 2005, compared with a net profit of NIS 11.4 million in 2004. The company attributed the deterioration in its bottom line to heavy financing expenses of NIS 82.8 million, amounting to 52.5% of turnover.

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The Slovenian KD Investments Romania intends to add this year four new funds to the one it was managing so far, MD Maximus. The four new entities will be a monetary fund that will also place 20% of the resources in stake, a diversified fund placing 50% of its assets in listed stock, a fund that will invest in mutual market funds (especially in diversified and stock funds) and a fund that will follow the BET Stock Exchange index, ACT Media news agency reports.

KD Investments has signed an equity distribution contract with Carpatica Bank, but also intends to set in place a distribution network of its own.

?We will expand to three financial points in Bucharest and others will follow outside the Capital,? said company manager Comin Paunescu.

Carpatica Bank has a network made up of about 140 units, ranking 7th in the system by this criterion and 19th by its assets in 2005.

KD Investments is a member of the Slovenian financial Group KD Group that operates in Slovenia, Slovakia, Serbia, Croatia, Bulgaria, Montenegro, Luxembourg.

In Romania, the group is also active in the bourse brokerage and insurance business.

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According to the most recent version of the bill on trading companies, the government will be authorized to adjust the minimum share capital of a joint-stock company to the inflation rate every two years at the most, so as to keep the amount at the equivalent in RON of 25,000 euros, ACT Media news agency reports.

The share capital of a joint-stock company or of a limited liability company shall not be less than 90,000 RON (25,000 euros), as to 92,500 RON ? the figure set forth in the previous variant.

?Except for the case when the company shifts to a different statute, the share capital shall not be reduced below the legal minimum amount unless the nominal share capital is brought in line with at least the minimum legal amount by a decision to increase the capital.

In case of failure to observe this decision, any interested person can request in court the company?s dissolution.

As for the share capital of a company with limited liability, this shall not be less than 200 RON, divided in equal social shares that cannot be less than 10 RON.

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Mindbank managers asked the numerous shareholders of the institution to mandate their representatives for the sale of the controlling stake to a bank of international importance by the end of 2006. The managers had announced privatization plans in the fall of 2005, seeking investors capable to support the future development of the institution, ACT Media news agency reports.


One of the few banks with a majority of Romanian private capital still on the market, Mindbank was founded in 1990 and has grown slowly to a market share of just 0.2% and total assts of almost 80 million euros in 2005.

Although a niche bank, Mindbank registered the previous year profits worth 2.45 million euros, that will be used to increase the institution?s share capital to 13.3 million euros in an operation that needs to be okayed by the Shareholders Meeting scheduled for April 26.

Due to the intensely split structure of the shareholders, putting together a majority of 51% of the bank?s stake for sale is quite difficult: 2,805 natural persons hold 25.51% of the shares (of them, the Kuwaiti H.M. Bahman holds 15.41%).

The National Handicraft Cooperation Association holds 25.2% and MISR Romanian Bank has 9.2%.

According to the bank?s managers, several shareholders have decided to join forces to sell the majority of 51%.

Following the audit performed in 2005 by an independent expert, bank managers are confident they could get 2 or 3 times the shares? face value in the deal.

Mindbank is preparing for the rocketing costs involved by the necessary expansion of its network and by the wage increase, the elements which ? according to CEC president Eugen Radulescu ? pose difficulties to small banks because of the rocketing costs.

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Horia Vilcu, the general manager of the Romanian branch of Czech nutritional supplement maker Walmark, says the market of these products will advance by at least 20% this year. Last year, the nutritional supplement market was assessed at 40 million euros, approximately 25% higher year-on-year.

The dairy market will exceed the one billion euros mark over the next three to four years, while the industry will process 2 billion litres of milk per annum, almost double the currently processed quantity.

Plus discounter store network will invest 45 million euros in expansion this year, taking the level of investments to over 100 million euros.

The Balkan Environment Association (BENA) completed all the paperwork necessary to run a program to fight border pollution in Romania and Bulgaria and the former Republic of Yugoslavia. The purpose of this project is to identify the level of pollution of the Danube River and of the Black Sea in order to assess the impact of the Bosnian war on the nearby environment.

BENA also is preparing a complex research program which will lead to the construction of anti-pollution units in the Black Sea region, a program which is to be financed by the World Bank.
The head of the organization, Fokion Vosniakos, tackled on Friday important environmental issues that Romania should solve, such as urban wastage management, adopting the EU environmental standards, industrial pollution and its impact on local rivers.

He added that the authorities also have to focus on water resources, trains and old power plants which do not follow the European requirements.
The association has trained over 600 people from Romania who are to assist the environmental modernization program in the country.

The Environment Association also founded offices in all the Balkan countries, including Romania and is active in several cities in the country, such as Bucharest, Craiova and Constanta.
BENA has initiated a research group called "Problema" which focuses on the Black Sea and aims at establishing the level of pollution of the sea and at identifying other environmental issues.
The Balkan Environment Association is a non governmental association founded in 1998 in Greece, in accordance with European Union standards.

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Transactions on the inter-bank foreign exchange market decreased significantly compared to previous trading sessions due to the absence of foreign investors, as most international markets were closed for the Catholic Easter holidays. The Euro closed the week in the 3.488-3.493 interval, close to the level registered on Thursday. The BNR official exchange rate was set at 3.4958 lei/euro. Transactions at the Bucharest Stock Exchange (BVB) amounted to 9.4 million lei (2.7 million euros) on Friday, the lowest level in the past eight months, also due to the lack of foreign investors around Catholic Easter. In addition, the apathy at BVB is the result of political instability, expected settling of the maximal stake in SIFs, sale of the eight percent stake in Petrom to employees and the investigation involving Rompetrol management. Operations with SIF and banks securities accounted for 70 percent of all transactions on Friday.  
Transfers of SIF shares amounted to 5.5 million lei, making the BET-FI lose 0.3 percent. The BET was up 0.91 percent and the BET-C, which evaluates the general trend of the market increased by 0.49 percent.

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Highway construction to connect counties in Moldova to the European highway network may begin only after the EU approves this route, said Suceava prefect Orest Onofrei during a meeting of the North-East Development Region prefects in Iasi on Saturday. The officials discussed the initiation of a project for the construction of a Budapest-Odessa highway that would pass through Suceava and Iasi.  

Northeastern prefects will ask the government to support the new transport corridor when it will come under EU scrutiny and to finance the feasibility study. Onofrei announced that investors have already shown interest in the construction of a segment of the highway on the Siret- Suceava- Vatra Dornei route.

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The shareholders of the Bucharest Stock Exchange (BVB) will analyze the proposal for a merger with the Financial- Monetary and Commodities Sibiu Exchange (BMFMS) on April 26. The shareholders will also discuss the 2005 financial reports and the revenue and expenditure budget for the current year, announced BVB President Septimiu Stoica. Both the General Shareholders Meeting (AGA) and the General Extraordinary Shareholders Meeting (AGEA) will take place on April 26. Stoica showed confidence in the merger of the two Exchanges, announcing that BVB has completed the software for the transacting of derivatives, an operation currently performed only at the Sibiu Exchange.

Derivatives could be transacted at the BVB by yearend as well. The shareholders of the Sibiu Exchange approved a collaboration protocol with BVB, in view of the merger of the two institutions this February but did not agree on a nominal capital increase, postponing the decision for May this year. The Romanian National Securities Commission (CNVM) authorized BVB and the Sibiu Exchange as a joint market operator. According to CNVM regulations, the share capital of a market operator should equal the RON equivalent of at least five million euro by the time Romania joins the European Union. BVB shareholders will also decide upon the Stock Exchange Code on April 26. One of the provisions of the code refers to the possibility that majority shareholders de-list the company from the Stock Exchange in case they acquire over 95 percent of shares through a public offer, announced BVB Director General Stere Farmache.

CNVM adopted a series of measures at the beginning of February that allows majority shareholders to decide the de-listing of the company from the Stock Exchange under certain terms. "The rules of the capital market allow for de-listing to be done by decision of shareholders alone. This is normal as the listing is a decision of the AGA, therefore de-listing should be conducted the same way. But withdrawal from transacting should be done through a public offer," Farmache said. He added that the Stock Exchange Code does not "collide" with the CNVM regulations, but completes them. The CNVM provision is not enough as it allows shareholders to decide on de-listing even if they hold less than 95 percent of shares. The majority shareholders of Asirom, Vel Pitar and Winmarkt have already decided to withdraw their companies from the Stock Exchange earlier this year, even if their stakes were under 95 percent.

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The feasibility study for the building of Unit 3 of Cernavoda nuclear power plant was finalized. Subsequently, the Ministry of Economy and Commerce (MEC) will launch a new company selection notice in order to allow other companies to participate as well to the project, stated official sources. The feasibility study also includes data regarding construction works for Unit 4 of the power plant.
Power plant Reactor 3 from Cernavoda will be built by a private company, having among its shareholders several investors interested in this matter. One of them is Nuclearelectrica, the current operator of the power plant, which will ensure the necessary land and utilities.

After the MEC received 12 letters of interest related to this project, several companies were selected at the end of 2004 for the building of Unit 3: LNM Holding, Enel and Ansaldo from Italy, AECL from Canada, Hidro Nuclear & Power from South Korea, Tender Group from Romania and AEFM.
The Minister of Economy and Commerce intends to launch in the following weeks a new selection process so that, beside the already selected ones, other companies could be able to participate.
The nuclear-electric power plant from Cernavoda was designed for five reactors using Canadian technology CANDU, with installed power of around 700 MW each.

Currently the power plant works with only one reactor which ensures over 10 percent of the national consumption of electric energy. A second reactor is scheduled to be operational in March 2007. When Reactor 2 will be ready the power plant will provide approximately 18 percent of the national production of electricity.
The construction works for the third reactor will begin this year and is to be completed in 2012 with the necessary costs amounting to approximately one billion euros.

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The cable communications company RCS&RDS will launch by the end of the year pay-per-view (PPV) and video-on-demand (VOD) services, allowing their clients to buy and watch TV programs on demand at any time.
Pay-per-view services, already very popular in Western countries, give TV viewers the possibility to buy programs and pay for them separately.
The chosen program is broadcasted at the same time for all those who order it, unlike video-on-demand services which allow TV viewers to watch the desired program whenever they want.
PPV and VOD services will include mainly music and movies.
These programs will be bought through an electronic TV guide available in the menus of digital reception units.

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The Turkish investors that own Prolemn Reghin want to invest 100 million euros in the construction of a factory for the processing of wood and will choose a location either in Romania or Bulgaria.
Mehmet Ilhan, Prolemn's sales director, said that the company would like to invest in Romania, but Romanian authorities are less interested in the project than authorities in Bulgaria.
"The Romanian authorities should be altogether interested in us investing here and not in Bulgaria because the factory's production will focus on exports and many jobs will be created," said Ilhan.
The Turkish investors referred to Galati or Braila, as possible locations for the new factory.
Prolemn is the primary venture of the Turkish group Kastamonu Entegre.

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The Howard Johnson Grand Plaza hotel will have a foreign manager starting May 2006, as the current General Manager, Tinu Sebesanu, will take over the CEO position at Trend Hospitality-Management & Consulting.
Sebesanu's successor, Peter Martin, has 20 years of experience in the hospitality field, acting in the past five years as the general manager at several 5-star hotels in the Orient.
Howard Johnson Grand Plaza, a 5-star hotel, last year had an 11 million euro turnover and an average occupancy rate of 65 percent. According to Sebesanu, the hotel expects a 12 percent increase in revenues in 2006.
Peter Martin intends to continue the hotel policy promoted by Sebesanu and wishes to raise the hotel occupancy rate by more than 8 percent in 2006.

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The law regarding the financing of some health expenditures, called the vice tax, will enter into force in a maximum of a month and in the meantime the norms for applying it must be issued, said the Minister of Health Eugen Nicolaescu.
President Traian Basescu promulgated the law regarding the health sector reform last Thursday, after the judges of the Constitutional Court rejected at the end of March the request of 37 senators referring to the some stipulations of the law that violated the constitution.

The vice tax will become private funds of the Ministry of Public Health (MSP) and is aimed at the excessive consumption of tobacco and alcoholic products, other than wine and beer, as well as for the financing of health expenditure.
These revenues will be used for investments in the infrastructure of the public sanitary system, financing national health programs and for the reserve of MSP used in special situations.

The law forces legal entities that produce or export tobacco products to pay ten euros for every 1,000 cigarettes or cigars and 13 euros per kilogram of loose tobacco used for smoking.
Legal entities that produce or import alcoholic drinks, others than beer, wines and fermented drinks, will pay two euros per liter of pure alcohol.

The legal entities that obtain revenues from publicity for tobacco and will pay a tax of 12 percent on revenue which includes valued-added tax (VAT). These revenues will become private funds of the Ministry of Public Health starting January 1, 2007.

The euro to RON estimates of the vice tax will be calculated using an updated exchange rate which is used for the excise tax.
All contributions are sent by the 25th day of the next month into a special account opened in the State Treasury and belonging to the Ministry of Public Health. The contributions that were not paid by the end of a fiscal year must be paid in the next year and the money will still have the same destination.
Mugur Isarescu, governor of the National Bank of Romania (BNR) said last week that the introduction of the vice tax could generate inflationary pressures, due to the four percent share of cigarettes in the daily basket used for the computing of consumer prices.

"After seeing what large share cigarettes held in the daily basket, of almost half the share of bread, you have the feeling that in Romania we are eating cigarettes and not bread," said Isarescu.
Dragos Negrescu, an economic consultant within the European Delegation Commission in Romania, stated that the vice tax is a contradiction because the alcohol and tobacco products sector obtained a postponement regarding the introduction of the minimum excise imposed by EU for these products.
"Besides the vice tax this sector will have to suffer the progressive increase of the excise tax, meaning a double burden," said Negrescu.

Romania agreed with the Brussels authorities to increase the present levels of the excise taxes, until reaching the minimum levels required by the European Union.
A study issued by Phillip Morris International in February showed that the vice tax could boost the price of a cigarette pack by 37-38 percent while cigarette taxes could hike by 50-60 percent.
Huub Savelkouls, the company's director for Europe, said that the vice tax of 19 eurocents per pack will maintain the same parameters for all cigarette categories.

Savelkouls believes that introducing such a tax will increase the level of tobacco taxes by 60 percent. "If we analyze the Romanian authorities' proposal we see that this tax will be of approximately 10 euros per thousand cigarettes, cigars and other tobacco products and of 13 euros per tobacco kilogram so, of 19 eurocents per pack and it will boost the price by 36 eurocents" he added.

The calculations were made for 97 eurocents, the most popular price category for cigarettes. According to Philip Morris, the price could hike to 1.3 euros per pack after the vice tax comes into force.
Philip Morris also believes that the new tax will bring profits to the state budget only for a small period because the cigarette consumption will decrease.

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Procedures for the assignment of public acquisition contracts will be examined by the Ministry of Public Finance, which will appoint inspectors to verify all the preliminary stages of the issuance.
The ministry will verify all procedures for assigning works with values surpassing 250,000 euros, before the addition of the value-added tax, and services and supply contracts valued at more than 40,000 euros.
When a contract is closed without making public the contractor's decision to take part in the tender, the checkups will look over the stages of the assigning process, starting with the invitation to take part at the negotiations and continuing with the assignment and signing of the contract.

The MFP inspectors will follow the procedures for assigning contracts, analyze documents issued by the persons to whom the contract was assigned, issue reports for each procedure that was fulfilled and send notices in cases where the procedures are violated.
Based on such warnings, the MFP can suspend the allocation of the contract or can cancel or modify acts that do not comply with the laws regulating this domain.

Authorities assigning public contract are required to inform the MFP about the opening of the procedures for assigning contracts.  Failure to comply with this regulation could result in a fine between 865 and 1440 euros.
With the exception of the stipulation declaring the MFP as the body in charge of the public acquisition verifications, which will become effective as soon as it is made public on the official register, the normative act will become effective on June 30, 2006.

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Israel Discount Bank, the third largest bank in Israel, will sell the Ilanot Discount mutual fund to the assets management company Clal Finance Batucha and to insurance company Clal Insurance Enterprises Holdings for 126 million dollars, according to Reuters. An Israeli daily announced last year that Harel Insurance Investments, a company specialized in insurance services was interested in the Romanian market. Clal Insurance announced earlier this year it intended to open a new insurance company in Romania, with an initial nominal capital of four million dollars. The company should begin its activity in the second quarter of this year.

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Romanian citizens, having the right to be compensated for a car accident occurring on the territory of an EU member state, will be able to receive payments from a Romanian institution if the insurer of the person responsible for the accident does not pay the necessary amount within 3 months.

The Insurance Supervision Commission (CSA) will set up a compensation body for these cases, the system becoming effective on January 1, 2007, stated Friday CSA Secretary General Mihai Tecau.
"Subsequently, the compensation body will recover the respective amounts from the foreign insurer. The body will act as an independent entity and will not be subordinated to the CSA," added Tecau.

The institution to be established is stipulated in the modifications recently approved by Parliament to law 32/2000 regarding insurance companies and insurance supervision.

The CSA is required by law to make both the compensation body and the fund of insurance guarantee operational within one month.
Payments will be made available from the Protection Fund for Street Victims, which has so far accumulated approximately three million euros, according to Tecau.
The fund's beneficiaries are victims of car accidents with unknown authors or those who do not have RCA policies.

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The value-added tax (VAT) reduction for basic food products will bring about a diminution in prices for delivering goods from the producers, but the decrease of the final selling price depends on retailers, states the representatives of food producers' associations.
The Senate has adopted Thursday a proposal of the Conservatory Party regarding the VAT decrease from 19 to nine percent for basic food products, such as bread, bakery products, meat, fish, milk, oil, sugar, rice and eggs.
Subsequently, it will be debated in the Chamber of Deputies.
Democratic Party President Emil Boc says that the VAT reduction for the basic food products is a decision that has to be analyzed in terms of its budgetary implications and constraints, and considers that the VAT value should be differentiated according to different revenue groups.

"The VAT reduction will cause a decrease in the ex works delivery prices for food products, which should be reflected in the stores," said Mihai Visan, Executive Director of Romalimenta, the Romanian Federation of Food Industry Employers.
For pork and meat processed products there is a forecasted decrease of delivery prices of about 10 percent, continued Visan. A similar reduction of producer prices is also estimated for bread and bakery products, according to Aurel Popescu, Rompan President, and the Romanian Association of the Employers in this field.

The President of the Romanian Association of Sugar Industry Employers' Ioan Armenean has recommended the authorities to supervise carefully retailers' activity as the VAT decrease could only lead to profit increases for retailers, not to a final price decrease for consumers.
On the other hand, egg producers are displeased with the fact that the final selling price is 2.66 times higher than the producer price.

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Softwin estimates it will have a 10 percent share of the Bulgarian antivirus software market, after it signed a distribution partnership with Tornado Sistems Bulgaria. According to Softwin, the Bulgarian antivirus software market will exceed 1.7 million dollars this year and the Romanian company intends to become one of the security software solutions market leaders in the next two years. The Softwin partner is a branch of Romanian company Tornado Sistems. Bitdefender is a suite of over 54 IT security solutions used by over 41 million people in about 100 countries. The Bitdefender brand is well-known in Bulgaria and Tornado Sistems and Softwin consider it the best option to increase their activity.

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The Romanian software and IT services market is expected to total around 750 million euros by 2007, more than double from 2004, Pierre Audoin Consultants Company (PAC) general manager Eugen Schwab-Chesaru informed, ACT Media news agency reports.


The information services will reach 400 million euros in 2007, PAC survey said.

Despite all this positive predictions, the Romanian software and service market will depend on certain sectors and will face many challenges once Romania joins the European Union.

In the upcoming two years, the Romanian software and information services will depend on the public sector, software and services costs in the public sector scoring a growth buy 33 percent of the total market, PAC official added.

As for the shortcomings, once Romania joins the EU, the Romanian software market will have a small number of main contractors, no more than 10 or 12 for projects bigger than 500,000 euros and the manpower will migrate to the international groups to come to or develop in Romania.

Likewise, the year 2007 will bring the dependence on competences not existing in Romania for projects with larger VAT, affordable only to the international groups, the PAC survey added.

There could also be a rise in the exports of the Romanian software products to the regional and the Western European markets but also a surge in the multinational companies' interest in investing in their own Romanian-based centers in 2007.

The estimates showed the software and services (IT exclusively) exported from Romania will reach about 500 million euros in 2007.

Over 2,000 experts in very scarcely covered technologies such as SAP, Amdocs, iFlex, Retek will be 'imported' from Poland, Hungary, the Czech Republic, Slovakia and Russia, to Romania by 2008, Chesaru added.

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The shareholders of paints and varnish producer Orgachim will vote June 14 on a proposal to amend the framework agreement with Romanian sister company Policolor, lifting the previous cap on the goods that the 2 connected companies can exchange.
The agreement was signed in 2003 and was reviewed each 12 months.
Orgachim and Policolor are owned by Malta-registered Whitebeam Holding.

The shareholders will also review a proposal to cover a 5.207 mln lev loss incurred last year with money form the company's reserves. Orgachim's '05 bottomline was messed up by the 8.32 mln levs that the company had to provision in connection with an ongoing litigation involving the State Receivables Collection Agency over a ZUNK loan.
The ZUNKs are long-term government bonds issued in 1994 to transform the non-performing loans of government enterprises into government debt.

If Orgachim wins the lawsuit, the provisions will be reintegrated in the profit and loss account of the company.
Orgachim posted net sales of 73.4 mln levs in 2005, up from 56.29 mln levs.

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The Romanian version of the magazine Le Monde diplomatique was launched on Thursday in the presence of several leading Romanian and foreign journalists, a press release from the magazine shows.
The launch gathered over 70 high-profile guests including journalists and analysts Rodica Culcer, Emil Hurezeanu and Bogdan Chirieac, film critic Alex Leo Serban, former Finance Minister Ionut Popescu, The Associated Press correspondent to Romania, Alison Mutler and several others.

The hosts of the event were the co-directors of Le Monde diplomatique, the Romanian version, Stephane Lucon and Alexandre Spahiu.

The editor in chief of the publication, Cristian Teodorescu, and Lucon presented the first issue of the magazine to the guests and underlined that, besides most of the stories that appear in the French version, the Romanian one includes articles by several leading journalists and experts from Romania.

The type of investigation report specific to Le Monde diplomatique requires the journalist to try to discover all possible witnesses to the event under investigation, besides the people involved, the press release shows. Other important features of the magazine are its somber style and its focus on content.
On the market since 1954, Le Monde diplomatique had 56 foreign versions at the beginning of the year, which amount to a circulation of about 1.9 million issues. In Romania, the magazine will be published as the result of the collaboration between the Catavencu Media Group and DLMB Media. One issue will cost 3 RON (about 0.85 euros).

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Commercial banks conduct campaigns to attract customers, particularly in the retail segment, by reducing interest rates on credits. While in March the lowest interest charged on mortgage real estate and personal needs credits was 6.75 per cent per year, for euro loans, at present the interests are at 5.95%, Nine o'Clock reports.


As of this week, Volksbank Romania has significantly modified the terms of credit products addressing individual customers, with the interest rate charged for real estate investment credits and personal needs credits standing at 5.95 per cent per year.

The bank thus shifts its attention on foreign currency crediting, after having focused on RON credits last autumn.

The interest rate for RON credits is kept at 7.75 per cent per year.

The bank charges an annual fee ?owing to minimum compulsory reserves,? which stands at 1.85 per cent for EUR and 1.36 per cent for RON.

The fee is calculated on the loan balance and is paid on a monthly basis, along with the interest rate.

Since February, banks have operated a series of interest rate reductions for both domestic and foreign currency credits, in spite of the National Bank of Romania?s decision to increase costs of the foreign currency resources attracted by banks.

Analysts expected the monetary policy to be further tightened after the meeting of the BNR Board in March, but the central bank decided to keep minimum compulsory reserves on foreign currency amounts at 40 per cent.

In fact, the decision to keep compulsory reserves at 40 per cent, which took effect in mid-March, was based on the fact that the share of foreign currency loans in the total non-governmental credit dropped from 60 per cent in January 2005 to 52.3 per cent this January.

According to bankers? estimates, this year RON credits will outperform foreign currency loans, while consumer credits will decrease as compared to the real estate and mortgage credits.

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At the moment there are five large shopping centers in Bucharest.

Bucharest will have 14 large commercial centers by 2008 and office spaces will increase, as the rate of yearly growth is 50-60 percent.
Several companies have announced their interest in developing office space and retail projects in Bucharest. Romanian businessman Iosif Constantin Dragan will invest 50 million dollars in the purchase of a 25,000 square meter lot and the construction of an office building near the Palace of Parliament. The company Africa-Israel announced a significant real estate project in the area near Timisoara Boulevard and Colliers estimates that by 2008 Bucharest will have 14 important retail centers.

The growth rate of the class A office-space market in Bucharest is superior to that registered in other capitals in Southeastern Europe and the margin might diminish in the coming years, believes Stefan Gheorghiu, director with the Europolis investment fund. Class A office space totals one million square meters (sqm) in Prague, 1.1 million sqm in Budapest and 1.5 million sqm in Warsaw, while Bucharest office spaces total only 250,000 sqm. However, the growth rate of the Bucharest office space market is 50-60 percent, and only 10 percent in other countries, Gheorghiu said. Due to the lack of buildings, investment funds are shifting towards construction, after they initially relied on buying finished projects. The sums paid by investors for the purchase of real estate projects amounted in the last three years to 350 million euros in Romania compared to 2.5 billion euros in the Czech Republic and one billion euros in Hungary. The main concern of investors is the diminishing rate of real estate returns on the Romanian market, which decreased from 12.5 percent to less than eight percent in the last three years.
Rents for high-quality office spaces in Bucharest are approximately 17-18 euros per square meter for complete buildings and pre-renting is done at about 15-16 euros per square meter. These prices are comparable to other capitals in the region.
Europolis plans investments worth 300 million euros for real estate projects in Bucharest and throughout Romania. Africa-Israel will develop its first real estate project in Romania, Cotroceni Park, in the area of Bucharest's Timisoara Boulevard, where it will build commercial spaces, office buildings and apartments. Construction on the site, located near the intersection of Timisoara Boulevard and Vasile Milea Street, will be completed by the end of 2007 or the beginning of 2008. Colliers announced that Cotroceni Park is the first of several projects that Africa-Israel plans to develop in Romania. The company bought a 121,000 square-meter site near downtown Bucharest in February 2005. The vice president of development of Africa- Israel Investments, Avi Noteh, announced at the time that the company could purchase the additional 40,000 square meters from the 161,000 square-meter lot. The value of the investment was not announced.
Africa-Israel Properties owns several real estate projects in the Czech Republic, Serbia, Great Britain, The Netherlands and Israel.

Colliers recently announced Bucharest would have 14 significant commercial centers by 2008, situated in different locations around the city. At present there are five large retail centers in Bucharest - Plaza Romania, Bucuresti Mall, City Mall, Jollie Ville and Unirea Shopping Center. Baneasa Shopping City, Floreasca City Center, Galleria Esplanada, Dambovita Center, Liberty Mall, Sema Park and Cotroceni Park are among the commercial centers that will be finalized in the coming years. "In the next three years, the Bucharest retail map will become very crowded, especially in the northern and center-west areas," said Monica Barbu, chief of retail with Colliers. The spaces in malls are leased at prices of about 30 euros per square meter, compared to the 20 euro per square meter average price in Budapest. This difference is due to the low number of malls in Bucharest. For example, Budapest has 15 large commercial centers, while Warsaw has 20 such centers.

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This is BSR Europe and Benny Steinmetz?s third project in Romania.

?2008 and 2009 will be record years for us,?  BSR Europe Ltd. (TASE:BSR) controlling shareholder and president Nachshon Kivity told ?Globes? today. Kalman Sufrin is the company?s other controlling shareholder and chairman. Kivity?s prediction is based on the fact that the company will complete several projects during this period. ?We?ll continue to be profitable in 2006, and focus on business and the steady expansion in activity.?

Last Friday, BSR Europe announced an investment in its third project in Romania. In a combination deal, BSR Europe and BSG, controlled by Benjamin (Benny) Steinmetz, will buy in equal shares a ten-acre lot in Bucharest. The sellers will be eligible for 12% of future revenue from the project, but no less than ¤6 million.

If BSR Europe and BSG are satisfied with due diligence, they will build 1,000 housing units on the site with an aggregate space of 105,000 sq.m. Construction will cost ¤65 million, according to preliminary estimates.

?As with previous projects in Romania, we?re cooperating with Steinmetz,? said Kivity. ?The lot already has a building permit, and I predict we?ll complete the project by the end of 2009. 30% of the housing units will be pre-sold, and the rest will be sold during construction. We anticipate no problems selling all the apartments.?

This is BSR Europe and Steinmetz?s third project in Romania. The partners? activity in Bucharest reached ¤250 million over the past nine months.

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Gaz de France, the main shareholder of Distrigaz Sud, has recently sold the 25% stake it owned at pipe producer Politub Bistrita (northwest) to Socotub France. The value of the transaction is confidential, but sources of the market claimed that the sum was around 1 million euros, ACT Media news agency reports.


Gaz de France entered Romania in 1994 when it bought shares at Politub.

In 2004, the company bought 51 percent of Distrigaz Sud shares.

The officials of Distrigaz said that Gaz de France sold its shares in order to avoid a conflict of interest, as Politub is an indirect supplier of Distrigaz Sud, but also because pipe producing was not its object of activity.

Socotub now owns 50 percent of Politub, the rest being controlled by the producer of installations and materials of constructions Teraplast GP Bistrita.

Politub, a company with Romanian-French capital, produces pipes for water and methane gas.

The company reported a 485,000 euros net profit and 6.4 million euro turnover in 2004.

Gaz de France took over the majority stake at Romania' s main gas distributor in a 311 million euro transaction, of which 128 million euro was direct acquisition, and the rest was capital increase.

Distrigaz Sud ensures gas supply for Bucharest and 19 southern counties.

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Foreign shareholders contributed more than 4 million euros (16 million lei) to the share capital of insurance companies in February, according to data supplied by the National Office of the Registry of Trade. Two insurance companies with foreign shareholders increased their capital in February: KD Life and ABG Insurance, ACT Media news agency reports.


The Slovene KD Group that contributed with more than 3.2 million euros (12 milion lei) to the new KD Life Insurance Company's capital, undergoing an authorization process, has made the biggest investment.

This is the minimum value of the share capital of a life insurance company as stipulated by the Insurance Surveillance Commission (CSA) norms.

KD Group is present in Romania through a company that manages investments and a brokerage one.

According to previous statements made by Group's officials, the Slovenes are to further invest some 3.5 million euros in KD Life apart from the share capital exceeding 3 million euros.

Greek shareholders of ABG Insurance, not yet authorized to conduct insurance activities, brought in February a share of 940,000 euros to the company's capital (more than 4 million lei), boosting it till the level of about 8.2 million lei, Ziarul financiar daily wrote.

CSA withdrew at year-start the authorization to sell insurance to the respective company because it did not increase its share capital in line with the Commission's norms.

ABG Insurance held a share capital of 4.2 million lei, whereas CSA norms stipulate a minimum capital of 8 million euros for the companies involved in general insurance, with the exception of the mandatory one.

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Consumer credits are to follow a steady upward trend in 2006, but will loose ground in favor of mortgage-type and real estate loans, according to representatives of the financial-banking market attending a seminar dedicated to the credit market in Romania, "ACT Media News Agency" reports. Factors that favorably influenced the evolution of personal credits were the growing population's revenues, reduction of the interest rate for credits in lei and hard currency and the increase of the real wage in 2005 by 14 percent.


According to Romania's National Bank, in the non-governmental credits structure granted to persons at the level of 2005 mortgage-type and real estate loans jumped by some 75 percent, but the consumer credits incurred the most significant dynamics, by more than 84 percent. "One can see a diminishing weight of consumer credits in the overall personal ones, compared to the mortgage and real estate ones that register a more accelerated dynamics", Prime-Vicegovernor of Romania's National Bank (BNR), Florin Georgescu, stated on Wednesday.

According to the commercial banks' representatives, consumer credits in lei are going to continue their marked expansion in the upcoming period.

"We must note that we are going to assist in the upcoming period to a preference for mortgage and real estate loans in hard currency and for consumer credits in lei", said the Romanian Commercial Bank (BCR) Executive Director, Dorin Cojocaru. He added that in recent years one could witness an accentuated increase of corporate credits in lei, but also a more accentuated increase of the retail credits in lei. "In the hard currency zone retail credits boosted their weight, but there is still a big gap compared to corporate credits. We can see a preference of the corporate zone for hard currency and the retail zone for the national currency. The tendency is to be maintained under conditions in which consumer and mortgage sector on the retail zone is to follow a balanced development", Cojocaru explained.

Retail credit with its main components - consumer credit and mortgage and real estate loans - is to follow a significant upward trend and this type of credit base is to further expand, Romania's banking population being set to jump from 39 percent in 2005 to 44 percent at the level of 2009.

In the following three years, the credits volume granted to population is to grow annually by 20 - 25 percent, half of the growth rate registered last year. "Credits expansion led to an unprecedented increase of personal credits in 2005 and at this year-start. Retail companies' turnover jumped by 26 percent on the first two months of the year", said Coface Romania's Director general Critian Ionescu.

"The increasing tendency of credits interest rates would remain a specific trait for this year even if it will mainly refer to mortgages and personal credits covered by a mortgage - the stars of the credits market in 2006 and in the years to come", Cristian Ionescu said.

He explained that on the medium-term mortgage credit would show the biggest growth potential, taking into account that this segment developed more slowly in Romania compared to other states in their pre-accession period to the European Union. Mortgage and real estate loans have a weight of 25 percent in the volume of population indebtedness as against 75 percent at the EU level.

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The privatization of energy facilities at Rovinari and Turceni will begin this year and is expected to be complete in 2007, announced Director General of the Office for State Participations and Privatization (OPSPI) Mihai Catuneanu. The Ministry of Economy and Commerce (MEC), majority stakeholder of the two power plants, cannot finance the investments necessary for their modernization, Catuneanu added.

"The energy complex needs important investments, approximately 800-900 million euros for modernization and the compliance with environmental standards. We must be realistic, we do not have that kind of money," Catuneanu said. In the case of the Turceni thermoelectric plant, MEC has already prepared the privatization strategy and forwarded it to the government for approval, while for the Rovinari complex the strategy proposal will be finalized by month-end. However, the government has the final word in the matter of these privatizations. Rovinari and Turceni are integrated energy companies, with both coal extraction units and thermoelectric power plants. In view of the privatization of the Craiova and Rovinari energy facilities privatization.

The Ministry of Economy and Commerce signed a financial consultancy contract with the consortium formed by Deloitte Central Europe Limited (Cyprus) and the Romanian- American Investment Fund. Deloitte & Touche is the sole consultant for the privatization of the Turceni complex.   The local subsidiary of the Czech electricity distributor CEZ already announced its interest in buying the power plants of Rovinari, Turceni and Craiova but also Electrica Muntenia Sud as part of its strategy to obtain independence from suppliers. In addition, the Turceni energy complex has spurred the interest of German group RWE Energy.

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Polynom, a Dutch company specialized in the production of car parts, intends to open a factory in Romania to supply components for the Dacia Logan. The initial investment is thought to be between 12 and 20 million euros. Polynom, a producer of tin, structures and moulds, is analyzing possible locations for its production facility. The investor is considering Pitesti, Brasov or Sibiu for its factory, which should be operational by 2006.

Polynom representatives have held talks with Automobile Dacia and have agreed to become suppliers for Logan. At the same time, they may provide car parts for other suppliers of Automobile Dacia. Polynom designs and produces steel, aluminum and plastic car parts, having six production facilities in Holland, Great Britain, Germany and the US. Ina Sheffler, Lisa Draxlmaier, Valeo, BOS Automotive, Valvetek, Johnson Controls, Sumitomo, Leoni, Auto Chassis International (ACI), Euro APS, Piroux, Iri, MCI Ingenierie and Metal Impex are among the significant investors that operate car parts factories in Romania. The Association of Car Producers and Importers estimates that the Romanian automobile and car parts production will amount to 6 billion euro in 2008, three times the level registered last year.

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Lowe & Partners, Initiative Romania, Draft Romania and Brand Connection have set up a new agency, specializing in public relations services, called Lowe PR. The agency will be led by Nora Ionita.

The Aquila Romanian group, one of the major players on the distribution market, for this year forecasts an approximately 30% increase in turnover from 2005, as the group aims to develop on the logistics market in order to be prepared for EU integration.

The government will reach a decision on the procedure for the sale of an 8 percent share package of Petrom to its employees after an agreement is reached regarding the involvement of all banks interested in this operation. Prime Minister Calin Popescu Tariceanu suggested that more banks be allowed to finance employees for the purchase of the shares rather than designating a single financial institution. The PM said on Wednesday that the Romanian Banks Association (ARB) should be consulted in order to find a correct and efficient fashion to sell Petrom shares directly to employees.

Minister of Economy and Commerce Codrut Seres recently stated that a bank or a bank consortium would mediate the sale, in case the government rejects the transfer of securities through an employee association. At the beginning of August last year the Petrom Employees Association formed a consortium with investment bank Credit Suisse First Boston and law firms Squires, Sanders and Dempsey; and Voicu and Filipescu for the negotiation of the share purchase, although the government had not yet decided upon the way in which the shares were to be transferred.

Credit Suisse First Boston had been authorized by the Employees Association to finance the purchase with 235 million euros in exchange for a share of the package.  
The Petrom privatization law established that 8 percent of Petrom shares are to be sold by the state to the company's employees for the same price at which Austrian Group OMV bought the majority stake, but does not specify how the transaction should be conducted. The minority stake is worth 235 million euros as the price paid for OMV was 5.25 eurocents per share.

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AutoItalia, the general importer of Fiat, Alfa Romeo, Lancia, Maserati and SsangYong, sold 1,552 automobiles in the first quarter, 31 percent more than in the same period last year. The company estimates a 20 percent increase in sales this year, up to 8,500 cars, following the general upward trend of the market, estimated at 15- 20 percent. The sale was stimulated by the wide range of brands and models, the development of post-sale services and the expansion of the dealer network. Fiat is the top seller, with 863 automobiles and 567 commercial vehicles sold. The company will introduce new models and styles this year: Fiat Albea, Grande Punto, Fiat Stilo, Alfa 159, Alfa Spider, Alfa Brera and the SsangYong Actyon.

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ABC Asigurari Reasigurari SA shareholders will decide upon a four million lei share capital increase in 2006. The operation will be conducted through the issuance of shares, by increasing the nominal value of existing securities, incorporating reserves or by compensating due liquid debts. The share capital increase aims to respect the 12 million lei minimum limit imposed by the Insurance Supervisory Commission (CSA). All sellers of a complete range of general insurance must increase their capital to 12 million lei, according to a CSA regulation. ABC Asigurari registered 3.7 million lei in premiums in 2005, an increase from the 2 million lei recorded the year before.  

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The 2.9% growth of industrial production in Feb '06 is characterized as below expectations by financial analysts. Florin Citu, chief economist with ING Bank Romania, said that the level is below the one posted at the respective period last year, when growth was of 4.2 percent, Bursa reports.


The industrial production registered in the first two months of 2006 a rise of 3.5 per cent as compared to the similar period of 2005, according to the data released by the National Statistics Institute (INS).

The growth rate of the industrial production in February is lower, being registered a 2.9 per cent increase.

In January-February 2006, the processing industry reported a lower increase as compared to the field's level, namely 3.4 per cent, an evolution that has been rather rare in the last years.

As compared to the similar interval of 2005, the total turnover of enterprises with main activity in industry increased 9.2 per cent, namely 10.9 per cent in February.

The value of construction works increased in the first two months of the year 18.2 per cent, as compared to the same period of last year.

The volume of the turnover made by enterprises with main activity in retail commerce increased 26.4 per cent.

On the other hand, labor productivity in industry was 7.4 per cent higher that the level reported at the beginning of last year.

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Niro Group is building the first European Chinatown in Dobroiesti, near Bucharest, and the project estimated at 200 million euros, stated Florin Suicescu, a Group executive, on Wednesday.
The Chinatown project will include, among others, a pre-built megastore, five commercial centers spreading over 60,000 square meters, 16-floor office building, exhibition center, hotels and seven residential blocks, said Suicescu.
Blocks will include 600 apartments and the estimated price is approximately 600 euros per square meter.
The residential area will be called China Towers, the commercial part Red Dragon and the office area China Business Center.
The first building of the project, completed in December 2005, has an area of more than 30,000 square meters and represents a 20 million euro investment.
The whole project will be developed throughout the next five years on a total area of 80 hectares.
It will be financed from Niro Group resources and loans from Romanian and foreign banks.
This group owns several commercial centers in the Dobroiesti area, which sell goods totaling around one million euros each day, according to Suicescu.
In addition, Niro also controls Bulevard hotel from Bucharest central area.
The hotel building will be consolidated and refurbished through a 10 million euro investment project which will be finalized in 2007.
Another Niro Group real estate development consists of building 545 apartments in the Stefan cel Mare-Barbu Vacarescu area.
The project is called Central Park and represents a 50 million euro investment to be completed in September 2007.
Finance for Central Park is made available from private sources provided by the Central Residential Park (a Niro Group company) and bank loans.
The residential complex has eleven blocks of eleven floors each, consisting of two-, three-, four- and five-room apartments as well as a 14,000 square meter park.
Clients must wait around 18 months from the time when they paid for the apartments until the moment when they can actually move into them. Prices start from 100,000 euros, 80 percent of the apartments having been already sold.
Niro Group had a turnover of 20 million euro last year, representing a 17.5 percent increase compared to the previous year.
Niro representatives estimate that the turnover will go up by approximately 25 percent in 2006, reaching 25 million euros.

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In order to avoid a large number of bankruptcies among the small and medium sized enterprises (SMEs) after EU accession, the Romanian state will try to become more involved in order to support small and medium sized investors and diminish the risks SMEs may face, Bursa reports.


The Ministry of Economy and Trade (MEC) plans to develop business assisting tools and support the companies that are created in such environments to work towards the economically advanced sectors.

On the other hand, MEC became aware about the importance of the research and development segment.

In this respect, the ministry's representatives said that an important step towards this direction is to support partnership projects between companies and research institutions and universities.

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Liberty Global affiliate UPC Romania has become the sole owner of local DTH operator Focus Sat after acquiring the remaining 50 percent stake in the company. 

Last May, Liberty Global acquired 50 percent of Focus Sat as part of its bid to strengthen its position in Central and Eastern Europe. ?We intend to become the leader in the digital satellite television market in Romania, by providing the best quality services and developing a strong relationship with our clients,? said Richard Anderson, the MD of UPC Romania. ?We bring here the experience that we gained in other European countries and we are confident that the DTH-market has potential in Romania.?

UPC Romania aims to make a ?substantial investment? in the local digital satellite market in the coming years, a statement from the company said. It also looking into rebranding UPC Romania as UPC Direct, its Eastern Europe DTH brand, ?but that will not happen in the near future,? the statement said.

Focus Sat Romania was founded in 2004 by Cristinel Popa, Bogdan Dragoi, Cristian Burci, Adrian Cojocaru, Valeriu Ionescu. It launched the first digital satellite television service in Romania on November 15, 2004 and has now over 10,000 subscribers.

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Petromservice, the biggest domestic provider of services and equipment for the oil and gas industry, targets double turnover for the next 3-5 years. The company is still largely dependent on Petrom, a company it split from four years ago.

Marius Ivan, one of the founders of the paints and enamels business Dufa Romania collected 16 million dollars (13 million euros) from the sale of the 35% stake held in Henkel Bautechnik Romania to the German Henkel group, according to information on the market. The company made 7 million euros in gross profit last year, while the turnover stood at 27 million euros.

The Romanian Commodities Exchange (BRM) brokered contracts last year totaling 590 million dollars, ten percent more than in 2004, announced the representatives of the institution yesterday in a press conference. The most active clients of BRM were the Romanian Railways (CFR), CFR Freight, CFR Travelers and the Bucharest Transportation Company. According to BRM president Mircea Filipoiu, the decision of Petrom to stop carrying out oil and oil products transactions on the commodities market resulted in the significant reduction of fuel transactions on BRM. Between 2002 and 2004, Petrom operated buying-selling contracts totaling 1.48 billion dollars and the sums obtained by the company from price differences.

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The state does not have much to offer for negotiations with the Indian-based Mahindra & Mahindra, regarding the privatization of Tractorul Brasov, because the financial situation of the Romanian company is very precarious, said the president of the Authority for the Recovery of State Assets (AVAS), Razvan Orasanu.
The official said that the Romanian state might take into account the possibility that the agreement with the Indian company might not be closed.

Orasanu stated that Mahindra did not request the government to grant any express financial subsidies but only to maintain the program for supporting farmers in purchasing tractors.
Sources close to Tractorul said that the Indian company proposed the reduction of the personnel employed in Tractorul, a solution that the government will accept only for 300 workers.

An additional request would be that Mahindra & Mahindra must not dismiss the present workers for a period of two years.
AVAS also wants to sell the main share packages of 120 companies this year. Among the first companies that will be privatized are Antibiotice Iasi, Asirom, Tractorul Brasov and Electroputere Craiova.
Pharmaceutical producer Antibiotoce, in which AVAS holds 53 percent of the shares, is the main company AVAS wants to transform into private property.
AVAS did not yet receive an official notification regarding the launching of a legal action against Romania by the American-based Cross Lander, owner of Aro Campulung, said the AVAS president, Razvan Orasanu.
"There were threats like this but they did not have a desirable end," said Orasanu.

The off-road vehicle producer announced this month that it will launch a legal suit against the Romanian state for allegedly breaking some stipulations in the Romanian-American agreement regarding mutual investment protection.
The carmaker, which is the owner of Aro Campulung, issued a statement last Thursday claiming that the company has been the target of constant attacks since it began its activities in Romania.

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The total number of personal computers (PCs) sold on the Romanian market increased by 39 percent, to approximately 600,000 units, in 2005, according to the International Data Corporation (IDC).
Total sales on the PC market increased 33 percent, to 500 million dollars.

The data provided by IDC includes the sales of PCs, laptop computers and servers.
Laurentiu Popescu, country manager for IDC Romania, said that individual consumers and small companies prompting the PC sales increase.

Office PCs remained the main preference of consumers, holding an 80 percent share in total sales.
Laptop sales doubled and the share of the total sales reached 15 percent, four percent higher than 2004.
High-grade servers maintained their 2 percent share of total sales.
The top company regarding sales was Flamingo, besting Hewlett-Packard which placed second, followed by K-Tech, Complet Electro Serv and Romsoft.

Horia Chitu, the executive director of Scop Computers, said in January that IT equipment acquisitions are often made depending on the initial cost instead of total operating costs (TOC).
This is the case despite studies which show that for printers initial costs represent only between five and 15 percent of TOC, the rest being represented by the cost of supplies such as ink, toner cartridges and paper.

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Construction material producer Henkel Bautechnik Romania estimates that in 2006 it will register a 35 million euro turnover, up 30 percent compared with the number reported in 2005, said the company's marketing director, Iulian Mangalagiu.
The official said that the estimate is based on the company's sales development on all market segments in which it is present.
In 2005, Henkel reported a gross profit of approximately seven million euros.
Henkel Bautechnik Romania's former general director, Marius Ivan, sold to the Henkel group the 35 percent share package he held in the company.
Company representatives declined to release the value of the transaction.

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Over one-third of the funds allotted by the Ministry of Agriculture for the crediting of farmers in the February bidding for the Farmer program have been contracted. The Ministry of Agriculture allocated 95 million lei for farming loans this year, out of the 700 million at the ministry's disposal. The funds were obtained by CEC, 25 million lei; BRD-GSG, 50 million lei; and Banca Comerciala Carpatica, 20 million lei. The three banks began accepting projects at the end of March. At present, there are 350 requests ready to be submitted to banks and 1500 financing requests are being analyzed and will become operational with the support of the National Agricultural Consultancy Agency and private consultancy firms. The Ministry of Agriculture will organize a second bidding on April 26, after the April 11 selection was delayed, as only one bidder was present.

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The financial group Rothschild will be the Romanian state's consultant for privatizing Electrica Muntenia Nord, Electrica Transilvania Nord and Transilvania Sud, stated Thursday the Director General of the Office for the Administration of State Participation and Privatization in Industry, Mihai Catuneanu.
"The contract was negotiated in detail with the selected consultant. We are waiting for the government to issue an official decision for closing this contract in order to have the buying offers until the end of the year," said Catuneanu.
He added that in the next couple of months the investors' selection stage for Electrica Muntenia Sud would also be finalized.

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Over 11,000 of the 48,500 people still working in the mining industry will be laid off this year.

The government allotted 200 million euros to infrastructure and regional development projects in order to turn 20 former mining areas into investor-attractive zones.
The program of alleviation of the mine restructuring impact involves three main components: dealing with the infrastructure, local economy development and institutional development, announced the state secretary for the coordination of economic activities, Gheorghe Pogea. "We decided that at the budget rectification that most likely will occur next week, the most important resources are to be directed at financing infrastructure projects, whether they are road or railway projects, and supporting education," said the government official. The funds will come from the budget, the World Bank and other external sources. Pogea said he believes the development of infrastructure is a key element in attracting investors and revitalizing the economies of the areas which are to be included in the program. Romanian authorities also intend to give momentum to the mine restructuring program so that subventions to the mining sector can be completely stopped by 2007 and only economically viable companies will remain active.
"Both the way in which the sums were allocated to projects and the way the projects themselves respond to the needs of the local authorities in the areas are affected by the restructuring process," said the state secretary.
The most considerable part of the program, worth 130 million euros, is designed with the purpose of developing the infrastructure. The state budget will allocate about 33 million euros under the condition that the difference of 97 million euros will be covered by loans contracted by the Ministry of Public Finance. This component of the program will support projects of the local authorities including road modernization, bridge construction and modernization, water management, energy infrastructure and the ecological rehabilitation of closed mines.
Authorities also provided about 60 million euros for the development of the local economy. Five million euros from the budget allocated to this destination would be obtained from loans and 15 million euros from the state budget. Funds would be used for the acquisition of tools and equipment and the construction and modernization of production facilities.
The third major objective of the program is institutional development at the local level. To this purpose, the authorities have allocated ten million euros of which 75 percent will come from credits. The goal of the project is to train personnel, acquire materials and equipment for the renovation of local city halls, and monitor the social impact of restructuring.
The program for the alleviation of the social and economic impact of mine closures will be carried out by the National Agency for the Development of Mining Areas.
In February, the Ministry of Economy and Commerce (MEC) presented to the government a memo, according to which over 11,000 of the 48,500 people still working in the mining industry would be laid off this year.
The towns of Balan, Borsa, Cavnic, Brad, the Ghelari-Calan area, Petrosani, Petrila, Aninoasa, Uricani, Lupeni, Vulcan, Motru, the Anina-Oravita zone, Moldova Noua, Abrud, Zlatna, Baia de Aries, Baiut, Matasari and Rovinari are the areas concerned by the program.
A few days ago, MEC announced, as part of the restructuring program, its intention to secure cooperation contracts for ten to 20 years with investors interested in modernizing and equipping mines. Investors would have the obligation of renting a part of the mine's assets and paying a rent for every ton of ore extracted in a month. They would also be forced to maintain the existing number of employees for a period of three years from the signing of the labor contract. The first mining companies included in the program are Moldomin Moldova Noua, Cuprumin Abrud, and Minvest, from which MEC has already received offers. The debts of Moldomin, Cuprumin and Minvest, amounting to 200 million dollars, will be cancelled, totally or partially, at the time of the property rights transfer in case of privatization or by the end of the year, provided that the companies pay their current tax liabilities.

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The non-governmental credit will rise 30 percent in 2006 in nominal terms, compared to 45.3 percent in 2005, said the first Vice Governor of the National Bank of Romania (BNR) Florin Georgescu, ACT Media news agency reports.


"We will have a 30 percent increase in nominal terms, below the last year's figures, so that the intermediation will reach our previsions of 24 percent, as against 21.1 percent registered last years," said Georgescu.

He said that credits in lei will have a larger share and a faster growth pace.

"Of course, we start from different basis, lower for lei, higher for foreign currency, but the difference will level in time, due to the faster growth pace of credits in lei," said Georgescu.

According to BNR analysis, the credits for consumption will diminish their share as against the real estate and mortgage credits.

"We see these credits more dynamic than the first," said Georgescu.

He reaffirmed that the increase in non-governmental credit is aligned with the BNR goal of stabilizing the prices, the macroeconomic indexes and of targeting the current account deficit.

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Romania will introduce a mandatory insurance policy for all home owners, a government official said Thursday.

Interior Minister Vasile Blaga said the insurance would cost about 20 euros ($24) per year, with all Romanians required to buy the policies starting next year.

Plans call for all insurance companies registered in Romania to pool together to establish a joint fund to pay for damages, Blaga said. Draft legislation will be submitted to parliament in the coming months, he added.

Romania struggled with massive flood devastation last year which left 74 people dead and caused more than euro1.5 billion ($1.8 billion) worth of damage to property.

Parts of the country are also in an active earthquake zone, including the capital, Bucharest.

There are more than 30 medium-sized earthquakes a year in the Vrancea region.

In March 1997, a 7.6 magnitude earthquake _the country's deadliest _ killed more than 1,000 people in Bucharest and in eastern Romania.

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Swedish ABB, Oriflame, Lindab, Volvo Trucks and Ericsson were the most important Swedish companies in Romania and posted a higher turnover, according to the data supplied by the Bureau of the Swedish Commercial Council in Romania, ACT Media news agency reports.

ABB, a producer of power equipment and automation, posted 102.8 million new lei in turnover, Oriflame, a producer of cosmetics, 82.06 million new lei, Lindab, a construction company, about 80.5 million new lei and Volvo Trucks, a motorcar manufacturer, reached a turnover of 56.7 million new lei (1 euro=3.5 new lei).

Also present on the market are the companies Assa Abloy, a producer of safety equipment, 57.1 million new lei, SAAB (Augusta Motors), a motorcar manufacturer, 4.65 million lei, Alfa Laval, a producer of equipment, 12.2 million new lei and Tetra Pak, a packaging producer, 4.34 million new lei.

The Swedish companies want to consolidate their position on the Romanian market by opening a bureau of the Swedish Commercial Council in Romania in the first week of April.

The bureau aims to support the Swedish companies that want to develop their international business, in Romania included.

The bureau has experience in developing business in over 40 countries and has the Swedish Government and the business sector as shareholders.

The council has 400 million Swedish crowns in turnover a year coming from the consulting granted to the companies wanting to expand their international business.

One of the important Swedish companies, Gripen International, which builds combat airplanes, wants to commercialise this kind of aircraft by opening a bureau in Bucharest.

"We have an offer for the Romanian Government we are going to present and are expecting a signal from it.

We hope to have the same result as in Hungary, where we delivered the first Gripen airplanes.

We want to sell airplanes in Romania too.

The development of a possible project in Romania might take between 2 and 3 years," said Gripen International representative Lasse Jansson.

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OTP Bank Romania targets to triple the value of deposits (EUR 280.1 M) and increase its lending portfolio five times (EUR 445.9 M). The bank also plans to triple assets by the end of the year (EUR 609.8 M), which will give it a market share of 1.5 per cent compared to 9.64 per cent at the end of 2005, according to a report submitted to the Bucharest Stock exchange, Nine o'Clock reports.

The report will be addressed by the OTP General Assembly of Shareholders on April 28th.

The lending portfolio of the Romanian subsidiary last year grew by 50.3 per cent (EUR 92.8 M), whereas deposits declined by 11.8 per cent (EUR 95.5 M).

The bank reported a loss of EUR 7.9 M.

The Hungarian institution intends to have a 2% market share for retail lending this year, compared to 0.17 per cent at the end of last year.

The bank would like to launch the mortgage loan for the building of homes, auto loans and fast money transfer products.

OTP also wants to expand its banking network as well as to develop its IT system.

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The Mindbank management asked the numerous shareholders of the bank, both individuals and corporations, to empower representatives to sell the majority stock of the bank "to an international bank," before the end of 2006, reported the Ziarul Financiar daily, ACT Media news agency reports.


The bank's management informed the shareholders last autumn about the intention to negotiate with some investors to support the bank's future functioning and development.

Mindbank is one of the few Romanian banks running mostly on Romanian private capital.

Although it was set up in 1990, the bank has increased slowly, its assets reaching almost 80 million euros in 2005, with the market share standing at 0.2 percent.

Although it functions as a niche bank, Mindbank succeeded in making profit, with 2.45 million euros obtained in 2005, money to be used to increase the bank's share capital.

The operation needs the approval of the Shareholders General Assembly, scheduled for April 26.

The bank's capital is expected to reach 13.3 million euros. The bank has a network of 12 units that covers most of the big cities in Romania.

The bank's shareholding is fragmented, with 2,805 individuals holding 25.51 percent of the shares.

The main shareholder of the bank is the National Association of the Cooperative Movement (UCECOM), with a 25.2 percent market share.

The MISR Romanian Bank took over early this year by the Lebanese from Bloom Bank, holds 9.02 percent of the shares.

There are some 20 banks currently operating in the Romanian banking system with market shares below 1 percent, which might have more and more difficulties every day in the fight for survival in conditions of tough competition.

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The sale of 8% of Petrom shares to its employees will take place through several banks and the government is to identify a way of involving all banks in the process of sale-acquisition, ACT Media news agency reports.

Prime Minister Calin Popescu Tariceanu considers that it is not advisable the sale take place with only one bank, as solutions should be found to involve all banks wishing to finance the employees in acquiring the respective shares, Oana Marinescu the spokesperson of the government announced.

Premier Tariceanu announced on Wednesday that he had appointed his councellor on economic matters Alexandru Ene to have consultations with the Romanian Association of Banks to identify a fair and efficient manner to sell Petrom shares directly to the employees, the spokesperson mentioned.

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Vega Ploiesti refinery, in southern Romania, posted over $100 million in turnover in 2005, up 60 percent from 2004, the Ziarul Financiar daily wrote, ACT Media news agency reports.

"The rise was mainly due to the change in the production's structure and to the better use of the raw materials," the company told the Rasdaq electronic exchange.

In the first three quarters of last year, Vega refinery reported a net profit of 5.6 million dollars and sales of 75.9 million dollars. Vega refinery manufactures special products, such as organic solvents, petrol and special bitumen.

The refinery produces auto petrol and diesel.

Vega refinery makes part of Rompetrol group.

It did not make public yet the financial results for the entire 2005.

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The value of foreign investments in the share capital of companies registered in Romania reached ¤207.9 mn in the first two months of the year, up 50.8 per cent since the corresponding period of last year, according to data released by the National Trade Registry Office (ONRC), Nine o'Clock reports.


In February, the value of foreign investments increased by approx. 37 per cent as compared to the corresponding period of 2005, to EUR 102.1.

As far as the countries of origin are concerned, leading the February foreign investor charts are the Italian investors, which set up 214 companies, followed by Hungarian ones, with 58 companies and the French with 56 companies.

The most substantial capital raise in February ? by EUR 24.3 M ? was operated by Impress Buftea, producer of packaging for the foodstuff industry held by a French company.

Plus Discount Romania, with a German major stockholder, received EUR 18.5 M in equity from the parent company, while the share capital of wood processor Prolemn, based in Reghin and controlled by Turkish investors, was increased by EUR 11.5 M.

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The CEC privatisation procedure will continue, as a similar procedure will be applied to the one used for the privatisation of BCR, announced the spokesperson for the Government Oana Marinescu. The CEC privatisation process will be carried on, with the sale of a stake accounting for 69.9 per cent of the capital to a strategic investor, which will include the 9.9 per cent of the capital which, under the law, will be included in Proprietatea Fund, Nine o'Clock reports.


The Ministry for Public Finances presented in the Cabinet meeting a memo on the CEC privatisation strategy.

In the upcoming period, the Ministry will draw up and present to the Government a normative act on the privatisation of the National Savings Bank (CEC).

?The CEC privatisation process will be carried on, with the sale of a stake accounting for 69.9 per cent of the capital to a strategic investor.

This will include the 9.9 per cent of the capital which, under the law, will be included in Proprietatea Fund.

The price of this stake will be transferred to the Fund, after completion of the sale, as it was the case with the BCR privatisation as well,? Oana Marinescu announced.

Executive?s spokesperson mentioned for Mediafax that the Government wants to maximise the profits that can be obtained from CEC privatisation, also taking into account the requests of the investors.

Marinescu explained that the Government is trying to combine the necessity of selling a package of shares as large as possible, according to the investors? requests, with the possibility of obtaining as high as possible profits for the state, through the further sale of the shares that were not privatised.

?The experience so far showed that the price of shares increased when the company?s performance level increased, following its taking over by the strategic partner,? said Marinescu.

The sale procedure will include three stages, similarly to the BCR privatisation.

Thus, in a first stage ? already completed ? non-binding tenders were submitted, Oana Marinescu explained.

Binding tenders will be submitted in the second stage, while in the third stage the bidders assigned the highest scores will present improved binding tenders.

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The Association for the Promotion of Brand Products and Fight Against Counterfeiting (APPMLA) launched the PRO Q hologram, which certifies original products and services, said that association's representatives yesterday during a conference.

The Consumer Protection Association and Promotion of Products and Services in Romania and the Association to Fight Counterfeit expressed their concern on the increase of afore mentioned phenomena.

Sorin Mierlea, head of APPMLA said: "The Police and us embarked upon a project that implements the PRO Q hologram. The hologram is a sophisticated device that cannot be reproduced by unprofessional equipment." Companies that will start using the hologram as soon as possible include the ones in the medical industry. Other 14 companies with activities in different fields also applied for the evaluation program for the hologram. A buyer can verify the authenticity of a product just by sending a SMS to the number that is imprinted on the PRO Q hologram.

During yesterday's event representatives of businesses said that both counterfeit and smuggle have grown into a world disease as such operations generate huge profits. They also claim that such phenomena destroy a company's brand and image, the state budget loses money from VAT and other taxes, while manufacturers have to fire people. Gilda Laz?r, head of corporate affairs at JTI România said:

"The legitimate market of cigarettes in 2005 was 10 percent lower because of smuggling and, according to estimates, repeated hikes in excises will lead to the increase of the percentage up to 13 percent. Loses will be significant as the value of the market is estimated to reach 1.4 billion USD."

The two phenomena affect both the cigarette, oil, wine, spirits, medicine and cosmetics markets. According to a report from the International Alliance for Intellectual Property, piracy rate in Romania is of 55 percent for movies, 78 percent for music and 74 percent for computer programs.

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OMV Romania will introduce a new service for paying utility invoices in the network gas stations after closing an agreement with HVB Bank Romania for paying bank loan installments at the gas stations.
HVB residential clients will be able to pay loan installments in 45 OMV gas stations, out of the total 75, starting mid-April.
The company is currently negotiating with electric energy and natural gas distributors, stated Wednesday Vlad Seitan, OMV Romania Retail Manager.
There are 10 operational OMV stations in Bucharest and the company intends to expand its network in Bulgaria and Serbia in the future.
In October 2004, OMV introduced a fast cash transfer service available only nationally, in partnership with Westaco Express.

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"All the Small and Medium Company representatives agree with Romania's EU accession but one quarter of them said that the companies they lead are not entirely ready for this," said the president of the National Council of Small and Medium Private Companies in Romania (CNIPMMR), Ovidiu Nicolaescu.
The official explained that 115,000 SMEs are not ready to face the consequences of Romania's EU accession and only one SME in seven showed that it took the proper measures to comply with the future EU requirements.
"I personally believe that the percentage is lower," said Nicolaescu.
The main domain where most of the problems should occur is the one concerning human resources.
SME representatives said that employee costs will increase after the EU accession and they will not have the financial resources to keep up with the new changes.

"More than 40 percent of the SMEs believe that they will have problems in certifying their products," said Nicolaescu.
The official stated that the proper measures for helping SMEs would be informing each sector about the EU laws and requirements needed to continue their activity.
"Approximately 60,000 pages of EU laws and requirements were translated into Romanian, so that the interested parties can access the needed information. If you give a SME leader this amount of paper it is as if you did not give him anything," said the CNIPMMR official.

A study conducted by the institution shows that most of the SMEs representatives are aware of the competition that will appear after the EU accession will have negative effects on their activity.
Valentin Cristea, one of CNIPMMR's vice-president, stated that the consultancy for SMEs should have started three or four years ago because these type of companies really need help.

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The new Customs Code introduces the notion of "authorized economic agent", so that the companies benefiting from this status can be spared from certain customs procedures.
The authorized economic agent status can be obtained by fulfilling certain conditions established by the customs authority.
President Traian Basescu endorsed the law regarding the new Customs Code last week. The new code complies with the latest modifications of the European Customs Code, regarding safety and national security, risk analysis and management.
Another modification concerns the introduction of a new way of declaring commodities by registration in the accounting books instead of filling in a customs declaration.
Unlike the old law, the new one provides a shorter deadline for declaring commodities presented at the customs and stipulates new customs destinations, the free fiscal warehouses. Legally, free fiscal warehouses are locations on Romanian territory with a fiscal status similar to that of free trade zones.
Also, the new regulation allows the indirect representation of individuals before the customs authority.

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The management team of the Carrefour hypermarket network in Romania says it has decided to speed up growth, increasing its store network from 6 to 11 by the end of next year.

Continuing its retail strategy, ABN AMRO has launched a personal credit card offer, targeting around a 12 percent share of the credit card market, Marijana Vasilescu, marketing manager of ABN AMRO consumer division, said.

Mittal Steel has invested over $41 million in environmental protection programs in the first four years since its privatization. The sum already spent by the Indian steel producers represents 60 percent of the $76 million total investment...

The 2.9 percent growth of industrial production in February is characterized a below expectations by financial analysts. Florin Citu, chief economist with ING Bank Romania, said that the level is below the one posted same time last year, when growth was of 4.2 percent.

The industrial production registered in the first two months an advance of 3.5 per cent as compared to the similar period of 2005, according to the data supplied yesterday by the National Statistics Institute (INS). The growth rhythm of the industrial production in February is lower, being registered a 2.9 per cent increase. In January-February 2006, the processing industry reported a lower increase as compared to the field's level, namely 3.4 per cent, an evolution that has been rather rare in the last years. As compared to the similar interval of 2005, the total turnover of enterprises with main activity in industry increased 9.2 per cent, namely 10.9 per cent in February.

The value of construction works increased in the first two months of the year 18.2 per cent, as compared to the same period of last year. The volume of the turnover made by enterprises with main activity in retail commerce increased 26.4 per cent. On the other hand, labor productivity in industry was 7.4 per cent higher that the level reported at the beginning of last year. In this interval, the main primary energy resources totalled to 7.18 million tons of oil equivalent, of which 4.3 million tons oil of equivalent from internal production.

According to INS, the rate of unemployment in February 2006 was 6.3 per cent proportional to the active population. The number of the unemployed registered at the end of February was 554,600 persons, and the counties with the highest rates of unemployment are Ialomita, Vaslui, Gorj and Hunedoara.

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The value of external syndicated credits and bond issues sold on the international market by the attained 2.342 billion dollars in 2005, according to a report published by the International Monetary Fund (IMF) on Tuesday. This figure represents an increase by 76.5 percent over 2004, say the representatives of the international institution.
As reported by the IMF analysts, Romania sold bonds last year amounting to 1.113 billion dollars, of which 613.6 million dollars in the second quarter and 500 million dollars in the third.

At the same time, syndicated credits granted to Romania advanced by 45 percent, from 846.9 million dollars in 2004 to 1.228 billion dollars last year. Most of the sum, 587.4 million dollars, was borrowed in the first quarter. Between April and June 60.7 million dollars were lent to Romania, while in the last two quarters, syndicated credits attained 372 million dollars and 208.5 million dollars respectively. For comparison, Bulgaria issued bonds totaling 642 million dollars while Hungary obtained in the same way 8.5 billion dollars.

According to the IMF study, the share of bad credits in the Romanian banking system was 8.2 percent, over 8.1 percent the year before. By June 2005, commercial banks established provisions representing 33.1 percent of the bad credits.
At the same time, return on assets increased from 2.5 percent in 2004 to 2.7 percent last year while the return on equity progressed from 19.3 percent to 22.3 percent.
The total amount of foreign capital that entered emerging economies last year was of approximately 407 billion dollars, over 287 billion dollars in 2004. This evolution was generated by the increase of the number of investors, increase of liquidities and the reduction of interest rates at global level.

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The last day of trading for Asirom stocks on Rasdaq is April 12, the shares being removed as a result of  a company shareholders' decision on March 27, according to a company statement. Following April 12, the investors who choose to leave the shareholder structure of Asirom will receive approximately 0.1 euros/share, a price approved based on an evaluation report prepared by Elf Expert SRL.
Asirom shares were traded on Tuesday for a mean price of 0.17 euros/share, the stock exchange capitalization reaching almost 110 million euros.
Asirom is one of the most prominent insurance companies operating in Romania. Its shareholders include Interagro (49.99 percent), Astra Romana refinery (8.34 percent), Broadhurst Investments Limited (15.24 percent), QVT Fund (11.13 percent) and AVAS (6.37 percent).

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The National Regulatory Authority for Communications (ANRC) will launch a public bidding for the designation of companies to install IT centers in 100 villages in rural areas, situated in 23 counties. The IT centers will provide access to telephony, fax and Internet services for the inhabitants of the targeted villages. 
The locations were selected as they had a low degree of telephony services available. So far, ANRC has organized three biddings for the installing of IT centers in 108 villages. The institution is to organize bidding for an additional 100 IT centers by yearend.

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BRD-Groupe Societe Generale launched Wednesday a form of loan for buying, building or refurbishing medical offices, as well as for acquiring specific medical equipment, installations and materials.
The new financial product is called "Expert Medical" and can ensure 100 percent financing of the future investment, states the bank.
The loan can be granted to doctors of any specialty, members of the College of Doctors, Association of Private Practice Dentists or College of Veterinary Doctors.
The maximum amount that can be financed is 150,000 euros or the equivalent in lei, the loan being granted for 13 to 84 months, with a 12-month grace period for real estate investments.
Interest rates vary for loans in euros and start at 10.75 percent per annum.

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The government approved an emergency ordinance that allows for companies under special administration to receive tax reimbursement to be used for the payment of salaries and utilities. Tractorul Brasov has asked for a new government resolution on budget reimbursements that specifies clearly that the provision be into force retroactively to the first month of this year. Tractorul would benefit from VAT reimbursement for January only if the government establishes the enforcement term of the emergency ordinance recently approved, said Director General Titus Serban. At the beginning of the year, the company had requested the restitution of VAT for December 2005- February 2006, according to which the factory would receive the necessary funds for the outstanding payment of salaries.

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The multinationals in Romania are seeing more and more job applications coming from abroad, many of which are even submitted by people from Western Europe, Ziarul Financiar writes.
According to specialists, foreign candidates willing to work here have come to see the Romanian market as a way to help springboard their career advancement, as economical development is in full swing. People are convinced that they can grow with the economic environment here and that they can learn much faster than they would in other less effervescent areas.
The job hunt targets every domain from services to manufacturing, and, most of the time, financial demands are not higher than those of domestic candidates.

"There are young or even somewhat older people in the banking system that are not part of the top management range who are interested in coming to Romania to develop their competency, earning a reasonable salary," stated Florin Luca, human resources manager of BRD - Groupe Societe Generale.  He believes that working in the Romanian retail banking market is far more interesting than gaining experience in a Western country, where the market is already settled and possibilities for growth are not as big as they are in an emerging economy.

"Possibilities for individual development are much greater in Romania than they are in the West, and what I mean here is, taking responsibilities, learning and developing competencies, and salaries," Luca explained.
According to its HR manager, BRD - Groupe Societe Generale has five foreign nationals working for it now, expats excluded, and CVs keep coming in, which was not happening two years ago.

Besides French applicants, the bank has caught the eye of some Americans, Hungarians, Czechs and Africans.
Still, he added, the foreign candidate that wants to work for BRD Groupe Societe Generale has to come with "added value," bringing something more to the organization, or else bringing them on board would be pointless. 
"There are some people experienced in corporate banking, others are experienced in emerging countries, while others bring their expertise in terms of intercultural work," Luca specified.

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The SME credit market is expanding, as the financing supply is quite rich, but often enough the cooperation between banks and small and medium enterprises has been hindered by the macroeconomic instability, head of Finansbank?s SME Department stated in a seminar, Nine o'Clock reports.


?At present, the supply of SME credit products in the domestic market is quite extended, but very often banks are forced to deny credit applications because long-term business plans cannot be drawn up,? Daniela Niculescu explained.

According to officials for domestic banks, the main problems facing the SME sector are the taxation, bureaucracy and the low access to credits.

?I believe the chief problem for SMEs will be competitiveness, once Romania joins the European Union, because they will have to face strong competition from Western companies; all other issues will have been settled,? Libra bank deputy chairman Emilian Bituleanu stated.

SMEs are encouraged to choose one bank in order to have easier access to crediting.

?The SME credit market has a diverse supply, but few customers,? Daniela Niculescu added, pointing out that for the first six months of the year a significant increase is expected in the SME crediting market.

According to bank officials, bureaucracy and the lack of a stable legal framework allow a relatively small number of companies to access credits.

?The legislative framework is intricate, for instance, the claim recovery procedure is rather lengthy under the current legislation,? the Finansbank official explained.

According to an OTP Bank research, the Romanian SME market is defined by the low range of collateral that can be used for accessing investment credits, the rather high financing costs, as interests reach as much as 14 per cent for RON credits, the lack of technical means and so on.

Also, businesses are affected by the low economic predictability, as the legislative framework is subject to frequent substantial changes.

?At accession time, and more importantly after the accession, there will be another problem, the lack of trained personnel, who will choose to work in the West, as it happened in Hungary and Poland as well,? OTP Bank Retail Manager Cristian Nae expects.

But banks also noted the main opportunities for the sector: the structural funds that Romania will receive after accession and the development of the financing product portfolio offered to this segment.

In 2005, SMEs accounted for approx. 55 per cent of Romania?s total exports, as opposed to 35 per cent in 2004.

Ranking first in the export standings are SMEs operating in the textile and mechanical equipment industries.

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The turnover of the companies operating in the retail trade increased in February by over 27% compared to February 2005, while the growth of the production of the local industry was only 2.9 per cent, according to the latest official statistical data. The rate of consumption growth, ten times bigger than that of production, as shown by the above data, is based on massive imports, Nine o'Clock reports.


According to a report of the World Trade Organisation (WTO) released yesterday, Romania ranked last year 27th in the top biggest importers of commodities in the world, with a value of the acquired assets of $40.5 bln, up 24% vs. the previous year, while in the top 30 exporters the country does not even appear.

The statistical data are the most worrying as in the first two months of 2006, the trade deficit tends to widen.

In the first two months of this year, Romania recorded a trade deficit of 1.401 bln euro, up 55.9 per cent over the same period of the past year, on the background of a high growth rate of imports, according to the data of the National Institute of Statistics (INS).

The value of the imports rose by 29.9 per cent in the period January-February 2006, to EUR 5.277 bln, while the exports progressed 22.5 per cent, to EUR 3.874 bln.

In February, the imports grew by 31.9 per cent, to EUR 2.857 bln, and the exports rose 27.4 per cent to EUR 2.1 bln.

According to INS, 51.1 per cent of the exports made in the first two months were final, while 48.7 per cent were exports of goods resulted from the active improvement of certain goods imported temporarily in order to be processed (in lohn - editorial note).

Significant increases of imports, of over 43 per cent, were recorded for the mineral products, transport means and materials.

The imports of mechanical machinery and devices, electric machinery, apparatus and equipment, sound and image recording and reproduction devices - also increased by 34.5 per cent.

In the case of the exports, the biggest growth was recorded for the transport means and materials (+81.5 per cent), mineral products (+72.4 per cent), mechanical machinery and devices (+41.8 per cent).

The share of the exports to the EU countries was 69.2 per cent, while the imports from the same region accounted for 59.5 per cent of the total.

According to WTO statistics the biggest importers and exporters at world level last year were the USA, China and Japan.

The exports of commodities from South-East Europe increased 17 per cent last year, to $132 bln, while the imports increased by 18 per cent, to $219 bln.

The exports of services provided by this region of Europe produced receipts of USD 52 bln, while the imports of services amounted to USD 29 bln.

WTO economists predict seven per cent growth in the volume of goods trade (i.e. in real terms, discounting price changes) and 3.5 per cent growth in the world economy in 2006.

A similar pattern can be seen for trade in goods and services measured in dollars even though the numbers are different because of higher energy prices, they said.

?The global trading system is undergoing a period of transition. Shifting economic circumstances, major advances in technology and the emergence of new players on the global scene all underscore that we are on the cusp of big changes,? said WTO Director General Pascal Lamy.

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The value of e-commerce transactions performed in Romania is expected to double in 2006 to $120 million, according to Madalin Matica, European Affairs Director of DotCommerce, Bursa reports.


The value of transactions performed through Romanian banks and shops amounted to $65 million last year, of which 44 million USD was transacted through DotCommerce.

In the first two months of 2006, the transaction value doubled year-on-year.

Approximately 500 e-shops are registered in Romania, but only 175 are functioning.

The usage rate of banking cards is 2.4 percent, in the context that 7.4 million valid cards exist in Romania.

"Sales through e-shops increased in 2005, but demand remains higher than the offer," said Matica and was quoted by Rompres.

In his opinion, e-commerce could grow as a result of increasing involvement of accepting banks, better partnerships with the transaction processors, lower banking interest rates and better cooperation between card issuers.

Matica believes that advertising is a decisive factor of success on the e-commerce market.

He said that 75 percent of the e-shops that entered the market over the last few months will run out of business precisely because of lack of advertising.

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The National Bank of Romania (BNR) decided to launch a new 200 RON banknote that will start circulating beginning with December 1, 2006, said yesterday BNR's governor, Mugur Isarescu.
"We have considered that a banknote with a value close to 50-60 euros is a necessity and we considered the average ATM withdrawals, that are surpassing very little the 200 RON level," said Isarescu.
The fact that the date when the new banknote will enter into circulation is a little bit late was explained by the fact that, during the period when both old and new banknotes are in use, there would be too many notes circulating.
Isarescu explained that the new banknote will help the population to get used to marks used in the EU.
Romania will have, after the new note will be issued, an equal number of notes compared to ones used in the EU.
The graphic of the 200 RON note will have the figure of the philosopher Lucian Blaga printed on it while the other side of it will have the "Thinker from Hamangia," an 8000-year-old statue found in Dobrogea (Romania).
"We have continued creating the graphic of the banknotes by using figures of the Romanian culture, taking into account a certain balance between Romania's areas," said Isarescu.
The revaluing of the national currency took place July 1, 2005 and referred to the elimination of four zeros from the present bills. For example, the 10,000 lei note became the one RON banknote.
Isarescu stated that in December 2006 all the old banknotes that were in use before the denomination will be withdrawn from circulation.
The BNR official said that at the end of 2005 the new currency held a 58 percent in total bills that were in circulation. The percentage will increase to 85 percent in June and to 100 percent in December.
The bills that are now in circulation have values of one, five, ten, 50 and 100 new lei, which correspond to the 10-, 50-, 100-, 500,000 and one million lei former bills.
 The BNR has issued a new 500 lei bill with a present value of five million lei (137 euros). The bills that entered into circulation in July have the same dimensions as euro bills with similar value, except the one leu bill which is the same size as the five euro bill.
The 10 to 500 lei bills are printed in bold relief on both sides and all bills are printed on a polymer support, similar to the material used for euros, while coins are made from steel plated with yellow brass, copper or from an alloy.
By using a polymer support, BNR ensured an increased security level for the bills, as well as being more resistant and easier to be processed in automated equipment.  The new bills, the bank says, are cleaner and more environmentally friendly.
One of the security measures introduced in the new currency is a holographic strip, which shows the value of the bill when viewed across the plane. Other safety features include a transparent window, special ink that changes color and a latent image included on the 100 lei note. The coins currently in circulation will be replaced as well, with the lowest value one ban (single unit) and highest 50 bani, which correspond to old coins and bills with values between 100 and 5,000 lei.
The National Bank of Romania decided that the new coins will have similar sizes to those of the euro coins but are not identical to prevent their use in EU automatic equipment.
"We took into consideration maintaining the current structure. To avoid confusion, the National Bank of Romania's administration board decided to use the same portraits and approximately the same colors," said Mugur Isarescu, governor of the national bank. As such, the one leu bill features on the obverse the portrait Nicolae Iorga, Romanian historian, publicist and politician and on the reverse the Arges Episcopal Cathedral. A picture of George Enescu, Romanian composer and one of the most prodigiously gifted musicians of the twentieth century is on the five lei bill, while the Romanian Athenaeum is on the reverse. The ten lei banknote features painter Nicolae Grigorescu, while the 50 lei will have the imprinted portraits of the aviation pioneer Aurel Vlaicu and the 100 lei bill, features Romanian publicist Ion Luca Caragiale. The 500 lei note will feature Romanian poet Mihai Eminescu on one side and the University of Iasi Library a lime tree and an issue of the "Timpul" (The Time) newspaper, where Eminescu printed part of his work on the reverse.
BNR officials will supply commercial banks with the new currency starting next month and will sign agreements with credit institutions to establish the method and details of the cash delivery.

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Foreign producers of car parts will invest at least 500 million euros annually in 2006-2008, announced the vice president of the Association of Car Producers in Romania (ACACOM), Constatin Stroe.Multinational car component producers have invested 2.2 billion euros in Romania thus far and they will consolidate their presence on the market in the coming years. According to ACACOM data, the total turnover of car component producers in Romania reached 2.38 billion euro, almost double the level registered in 2004. Domestic producers account for 900 million euros of this sum, while foreign companies have a total turnover of 1.48 billion euros. Car producers in Romania generated revenues exceeding 1.4 billion euros, with Automobile Dacia accounting for 1.2 billion euros of the total revenues.Exports of CKD (Completely Knocked Down) collections, used for car assembling reached 500 million euros last year.  Ina Sheffler, Lisa Draxlmaier, Valeo, BOS Automotive, Valvetek, Johnson Controls, Sumitomo, Leoni, Auto Chassis International (ACI), Euro APS, Piroux, Iri, MCI Ingenierie and Metal Impex are among the most significant auto part producers in Romania.

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The tender organized for selecting the banks which will grant loans to the Romanian farmers through the Farmer program will take place April 26 since at the previous selection Tuesday only one offer was presented, shows a statement of the Ministry of Agriculture.
"For the tender held on April 11, only one offer was presented - by the Romanian Commercial Bank. Under these conditions, in accordance with the law, the tender will be repeated," reveals the same statement.
The Ministry of Agriculture makes available 94.7 million euros for the companies interested in participating in the tender. For the April 26 tender, a selection can be made even if only one submitted offer remains, provided that all the legal and task book requirements are met.
The Ministry of Agriculture allocates around 200 million euros for financing farmers on low interest rates. This amount is intended for co-financing some SAPARD projects (170 million euros) and for direct investments without EU financing (30 million euros). The banks will grant farmers loans at an interest rate of five percent.
The ministry has already allocated through a tender held in February, approximately 27 million euros, the funds being granted to Romanian Savings Bank (CEC) - 7.2 million euros, BRD-Groupe Societe Generale - 14.4 million euros and Carpatica Bank - 5.4 million euros.

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The introduction of the vice tax could generate inflationary pressures, due to the four percent share of cigarettes in the basket used for the computing of consumer prices, said BNR Governor Mugur Isarescu on Wednesday. The favorable evolution of prices in February and March does not guarantee that inflation will stay benign as there are still potential shocks, especially from the supply side. The excise for cigarettes will grow by 25 percent after July 1 and will increase the price of a cigarette pack by 600 lei. The rate of inflation is down to 0.21 percent in March, a small decline from the 0.24 percent level in February.The average price increase was 8.41 percent compared to March last year, announced on Monday the National Statistics Institute (INS).

The inflation rate this year to date is 1.48 percent, representing a 0.5 percent monthly average. Analysts say the slowdown in inflation was better than expected and that new measures for strengthening monetary policy are far-off. "The March inflation rate was below expectations and thus reduced the chances for BNR to increase the official interest rate in its next board meeting on May 11," said ING Bank Romania's chief analyst, Florin Catu.He believes that, in case of shocks that might unbalance inflation, the Central Bank will first wait in order to see the effects and then counter with a more restrictive monetary policy. For this year, BNR targets a 5 percent inflation rate, with a maximum 1 percent deviation.

The rate of inflation was 8.6 percent last year, exceeding BNR's 8.5 percent target.
Foodstuff prices saw a 0.42 average increase in March, while other goods were 0.11 percent more expensive. Tariffs were down 0.04 percent, causing the inflation to slow 0.01 percent. With regards to foodstuffs, higher than average increases were registered for sugar- 12.4 percent, vegetables and canned vegetables- 1.6 percent, cheese- 1.3 percent and fresh fruit- 1 percent. Coffee prices were up 0.5 percent and alcoholic drink prices rose 0.4 percent. These increases were tempered by moderate reductions in milling prices, chicken meat, pork, cooking oil and fats and a significant 12.4 percent reduction in egg prices. Tobacco prices were up 0.7 percent, while drug prices decreased 0.7 percent due to the introduction of new maximal tariffs regulated by the drug catalogue. The rate of exchange caused telephone prices to decrease by 1.2 percent.

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The privatization of the Romanian Savings Bank (CEC) will continue by applying a similar procedure to the one used in the privatization of the Romanian Commercial Bank, said the government's spokeswomen, Oana Marinescu.
The Ministry of Public Finance presented its position regarding CEC's privatization.
"CEC's privatization process will continue with the selling of a 69.9 percent share package, to a strategic investor. It includes the 9.9 percent shares that, according to the law, belongs to the Property Fund and whose value will be transferred to the Fund after the sale, as it was done in BCR's case," said Marinescu.
The sale will be performed in three stages. The first stage has been completed and consisted of submitting preliminary offers for the shares. The second stage will deal with submitting the main offers while the third stage will consist of submitting the final offers.

The sale of the share package belonging to the Romanian Savings House (CEC) will be made only for important sums of money and the Romanian authorities reserving the right to reject all offers if the price is not convenient, said Minister of Public Finance Sebastian Vladescu this month.
"I have made an official announcement that, if the offered sum is not satisfactory, we are not selling CEC," said the minister.
The official believes that it is normal for the authorities to demand a large price for a bank such as CEC, this being one of the oldest banking institutions in Romania.
Steven van Groningen, president of Raiffeisen Bank Romania, recently stated that the price of one billion euros for CEC is large, especially for a bank that wants to maintain its specialty in the rural areas. The Ministry of Public Finance is the main CEC shareholder. 

CEC has the largest territorial network in Romania, owning 1,400 units. The bank was present mostly in the savings sector until last year, providing their clients a guarantee on all deposits. In the active sector, the bank focused on the monetary market, investing in placements in the National Bank and state titles. The strategy generated a constant drop of the market share and negatively affected financial results.

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BVB President Stare Farmache recently suggested that Mass Privatization SIF shareholders might pay their taxes by selling their shares

SIF representatives are to ask CNVM and their own shareholders to clarify their statute, either as commercial companies or collective investment entitiesFinancial Investment Companies (SIFs) pay profit taxes just as a commercial company but also commissions perceived by the Romanian National Securities Commission (CNVM), as they are operators on the capital market, indicated SIF Transilvania president Mihai Fercala on Tuesday during a debate organized by the National Securities Companies Association (ANSVM). SIF Banat-Crisana president Ioan Cuzman added that the registration of SIFs as collective investment entities or commercial companies must be clarified. "If we want SIFs to be collective investment entities, then they ought to operate according to the regulations of the capital market, including the provisions concerning involved parties and joint action. If not, we should eliminate these rules," Cuzman said. According to capital market law, joint action refers to the situation where two or more investors act upon an agreement to buy shares in order to obtain control or majority ownership in a company. Fercala announced he would make a proposal at the extraordinary general shareholders' assembly for the amending of the constitutive act of SIFs and warned he would do so in spite of CNVM opposition.  "Shareholders need to decide upon what we are to do, if they want SIFs to form an investment fund or a financial or holding group commercial company" Fercala said.According to current legislation, SIFs are both investment funds and commercial companies as a special law together with a general one regulates them. The general law regulates the aspects not covered by the special law.  Parliament recently passed an emergency ordinance that regulates the maximum stake in the capital of a SIF. The law provides that any person will be allowed to hold, alone or in a joint action, a maximum of one percent of the share capital of a SIF. The bill was forwarded to the presidency for promulgation.
According to ANSVM, the ordinance that requires participants in a joint action to give up ownership of shares that exceed the one percent limit over the next three months is a retroactive enforcement of the law. Investors should not be sanctioned for having acquired shares in excess of one percent while allowed by legal provisions. 
During the meeting, SIF representatives restated that the ordinance is unconstitutional as it breaks the principles of private property. "No one has the right to interfere with the activity of a commercial company. Company shareholders are solely entitled to change the rules of the game. They cannot be compelled to sell shares bought legally," Cuzman said. Problems could arise from the selling of shares which exceed a one percent stake - mainly a pressure on the market, which would result in a loss of value in the event of massive sales imposed by law. The net assets of the five SIFs amount to more than one billion euros and a stakeholder with only one percent could well influence decisions. The current maximum stake is 0.1 percent and there is concern that in general assemblies the vote of a one percent stakeholder would count as much as the votes of many small shareholders, especially as no more than a few hundreds shareholders take part in general assemblies.  Fercala believes that the structure of ownership is dispersed now, but the concentration will increase so that in one or two years institutional or independent investors could own a 60-70 percent share of each SIF. The issue of the considerable shareholder dispersion could be addressed by a proposal made by BVB President Stere Farmache recently. The proposal is for the more than 9 million participants in the Mass Privatization Program to be able to pay some of their taxes with shares. The residual shares that Romanian citizens hold in SIFs are worth at least 250 million euros and account for important percentages of the capital of these companies. About seven million people own 130 RON in shares but estimates point out that there may be 9 million SIF shareholders.

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Deputies in the Judicial Commission have approved on Wednesday that the Registry of Commerce pass from the Ministry of Justice to the Chamber of Industry and Commerce (CCIR) beginning January 1, 2007. The decision is part of the new bill on Chambers of Commerce. CCIR should receive the benefit of the doubt about its ability to manage a public service like the Registry of Commerce, believes PNL deputy Sorin Zamfir. "The money cashed by the Registry from businesses should go to the Chamber, an institution which supports the business environment and needs financing," Zamfir said.

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Foreign investment value weighted in the nominal capital of  companies owned in Romania was of 207.9 million euros in the first two months of 2006, an increase of 50.8 percent compared to the same period of 2005, according to the data published by the National Trade Register Office (ONRC).
The foreign investment value went up by approximately 37 percent in February, compared to the same period of 2005, reaching 102.1 million euros.
ONRC considers foreign investments as the value of foreign capital subscribed when the company is registered added to the subscriptions through supplementary foreign capital increases, plus or minus nominal capital assigned by or in favor of the resident partners or shareholders and subtracting the capital subscribed at the companies withdrawn from the National Trade Register Office.
Regarding the countries of residence, the first in top in February are the Italian investors, who set up 214 companies, followed by Hungarian investors with 58 companies and French businesspeople with 56 firms.
The greatest capital grow in February - 24.3 million euros - was operated at Impress Buftea, producer of packing materials for the food industry owned by a French company.
Plus Discount Romania, having a German main shareholder, operated a 18.5 million euro capital increase, while Prolemn, a wood processing company from Reghin controlled by Turkish investors, majored its capital by 11.5 million euros.
Other companies which had important capital increases in February are Bardeau Holding Romania, a company from Timisoara owned by Spanish investors (by 7.1 million euros), Nexans (by 5.8 million euros) and Home Art International (3.9 million euros).

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If Romania wants the doors of the European Union to open on 1 January, it must invest billions of euros in environmental protection. But many are skeptical that the country will do it.

For years, the town of Copsa Mica, in Sibiu county, in the heart of Romania, has been synonymous with heavy pollution. The roofs of the houses are black, and at the end of a day spent here black dust will cling to your clothes. This is thanks to heavy industrialization during communism, when a giant zinc and lead smelter was set up here with little care for environmental protection.

But with the 2000 privatization of Sometra, the company operating the factory, residents hoped the pollution nightmare would end. The company was sold to the Greek enterprise Mytilineos, which was supposed to pump $15.4 million into environmental protection.

But that hasn?t happened. Dimitris Samaras, deputy director of Sometra, said Mytilineos has not invested this money because it had to first cover Sometra?s debts, which were higher than declared by the Romanian state when it launched the privatization process. The Greeks so far have invested only about a quarter of the required sum. Sometra officials estimate that they would have to spend about $20 million in order to meet EU environmental-protection standards.

Among other tasks, the factory must cut emissions of sulfur dioxide, lead, and cadmium, and reduce the pollution that goes into the Tarnava Mare River, which crosses the town. Pollution has decreased in the town and river in recent years, according to a report done by the regional governmental agency for environmental protection, but the Copsa Mica factory remains the main source of pollution in the county and one of the largest polluters in Romania.

Copsa Mica is an extreme case, but it?s symptomatic of Romania?s pollution problem.

Industrial emissions, heavy traffic, irrational logging, and building without care for environmental norms have fed the pollution that has ravaged the country. Bucharest is the most polluted capital in Europe, with an average of 273 tons of dust and 125 tons of lead marring the city every month, according to a report by Eco-Europa, an environmental organization.

In the past 10 years, the death toll in Bucharest from respiratory diseases has ballooned from 3.9 to 48.4 per 100,000 inhabitants.

ENOUGH ALREADY

The EU has told Romania it must get serious about cleaning up the environment.

As many as 508 of the country?s largest industrial polluters could be shuttered on 1 January if they don?t make the required investments in environmental protection. Among them are refineries Rafo and Rompetrol Rafinare Petromidia, and chemicals maker Oltchim.

In addition, the 284 crematories in Romania?s hospitals, used to incinerate biological waste and human remains, are likely to be closed if they don?t modernize their technologies to correspond to environmental standards. Those modifications, including introducing chemical sterilization or even building new facilities, will simply be too expensive for many hospitals.

Another 195 companies with significant gas emissions have gotten permission from the Ministry of Environment to extend the deadline for investment to 30 October 2007, and another 200 enterprises have received a grace period of until 2018.

So far, only 13 large industrial enterprises have made significant investments in environmental protection and have therefore received an ?environmental authorization? allowing them to operate. Under an agreement with the EU, that is what the remaining 508 major polluters must do.

Sulfina Barbu, the environment minister, has estimated that the country must spend some 30 billion euros ($36.3 billion) on the environment by 2018. Barbu said the Romanian government does not want to close down the companies not complying with the environmental requirements but wants them to reach the terms set out by the EU. Only by doing this will they be able to compete with their EU peers, she said. The EU requirements are fixed and can?t be postponed or renegotiated, Barbu warned at a seminar on the environment organized by the Romanian daily Adevarul in May 2005.

In an annual report issued in November, meant to track Romania?s progress toward EU-entry norms, the European Commission warned that the country must solve several major problems related to its environment. Following this warning, hospitals not complying with the legislation requiring certain standards for burning dangerous medical waste will face fines of up to 1,000 euros.

The Romanian government might have to pay fines to the EU if it does not fulfill its commitments made during accession negotiations. Other new members have experienced the Brussels whip. Poland, for example, has been assessed fines of 300,000 euros per day for failing to comply with environmental standards.

The EU signed the accession treaty with Romania and Bulgaria in April 2005. According to November?s Romania country report, Romania has gone far to harmonize its legislation with the EU?s, but it has also received red cards for some fields where it lags behind. They include border security, the fight against corruption, food safety, and problems related to industrial pollution. EU member states have stressed in the recent past that eradicating pollution must be high on Romania?s agenda.

MONEY FOR AIR

To implement the environmental projects, multiple sources of financing are available. Romania can earmark money for these projects from the state or local government budgets, or it can tap into a variety of pre-accession funds or take internal and external loans. The potential pre-accession funding sources amount to hundreds of millions of euros. Another source of financing is LIFE, an EU financial instrument aimed at protecting the environment by promoting nonpolluting technology and urban planning. The value of financing through LIFE is, on average, 500,000 euros per project.

And domestic funding is available as well, from the Environment Fund Administration (AFM), a public, self-financed institution within the Romanian Ministry of Environment and Rivers Management, which manages a public fund geared toward environmental protection. Companies and institutions ? depending on how much they harm the environment through their activities ? are required by law to contribute to this fund or face fines of up to 10,000 euros.

But there isn?t much experience in Romania in putting together environmental-improvement projects, and much of the money sits waiting to be used. To apply for financing, companies must fill out a form, attach supporting documentation, and submit the file to the AFM or to the regional government administration for environmental protection.

The process is also marred by lack of information. ?We didn?t even know that we had to make investments in our incinerator,? said Nicolae Andries, the director of technology at the University Dentistry Hospital in Bucharest, which is on the list of polluting hospitals. Andries said the hospital pays a courier to take the waste to a crematorium in the town of Suceava, in the Moldova region, and that the hospital doesn?t have tens of thousands of euros to invest.

CLOUDY FUTURE

At least one top environmental official is pessimistic. Silvian Ionescu, chief commissioner of the National Environment Guard (GNM), said he does not believe that Romanian industry can afford to cover all the environment-related costs. The GNM is the state body in charge of implementing government policy on the environment and imposing penalties on those breaching environmental legislation.

Companies are reluctant to take out loans for environmental-protection work because the economic outlook in Romania is gloomy and companies are not sure they will be able to repay the loans, Ionescu said. These companies prefer to shut down and have the state clean the area, and then to go to court with the state to settle their obligations. But Minister Barbu has said that, given closures, companies will have to bear the costs incurred by a shutdown, including cleanup, and the state will demand such in court.

Romania will learn more about how satisfied the EU is with its progress on the environment next month, when the next country report is released. Technical in nature, the report could be decisive in determining the country?s accession date, finally.

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Eureko, the majority shareholder of insurance company Interamerican Romania, registered an increase of 114 percent in pre-taxed profit in 2005 compared to 2004, standing at 826 million euros, ACT Media news agency reports.

Regarding the underwritten gross premiums, their volume reaches 6.577 million euros, up 19 percent over 2004.

All the activity sectors - life, non-life and health - have significantly contributed to the company's revenues. The overall capital of Eureko amounts to 111 percent, from 4.041 million euros in 2004 to 8.525 million euros in 2005 (following the merger with Interpolis).

The main insurance companies of the group are listed with ''A+'' (for long rating in the long run and also for rating of financial power of insurer).

Standard&Poor's recently improved the perspective over assets and the main insurance companies of the group from ''stable'' to ''positive''.

Eureko B.V. is one of the biggest financial groups of Europe, activating in over 10 countries.

Eureko was set up in 1992, in Utrecht (the Netherlands) and its main activities deal with insurance and investment funds.

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Siad Romania, a local branch of Italy's industrial gas holding Siad, will earmark 25 million euros for a greenfield investment project to be carried out on the former Siderca industrial platform of Calarasi, ACT Media news agency reports.


The investment will bring about an industrial gas production facility to supply liquid oxygen, nitrogen and argon to the local industrial companies, which include TenarisSilcotub steel maker as the main customer.

This will be the second investment in industrial gas in Clarasi, after the project of Italy's Air Liquide.

"We have noticed that there are big opportunities in Clarasi, as there are world renown companies operating there, including Saint-Gobain and Tenaris.

Tenaris is of relevance to us, as the Tenaris-Siad partnership has a successful history in Italy.

To us, their presence signified the local environment stimulates business growth," said Siad Romania General Manager Cristinel Mihailescu.

The new investment project will be an attempt by Siad to consolidate its stand in Romania and the region, Siad officials said.

The company also plans to finalise late this July its 5-million-euro project for an industrial gas bottling facility on the outskirts of Bucharest City.

According to Mihailescu, the finalisation of these projects will very much improve the market stand of Siad in Romania, which will thus become one of the largest industrial gas makers of Romania.

Siad Romania has so far been an importer and supplier of industrial gas, as it did not have production facilities.

The management of Siad Romania expects a business turnover of some 1.9 million euros, up approximately 20 percent from 2004.

The largest local player in the industrial gas market, Germany's Linde AG, one week ago unveiled plans to build an air separation facility in Ramnicu Valcea.

Air Liquide Romania, another main player besides Messer, Petrogaz, Carbid Gas and Buse Prodgas, has started an investment project in excess of 10 million euros in an oxygen and nitrogen production facility located in the vicinity of the plain glass factory of Saint-Gobain in Calarasi.

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K Tech - Ultra PRO was leader of the PC market in Romania in 2005, with a 12.8 percent market share. K Tech - Ultra PRO ranked first also in point of desktop sales of one's own brands, according to IDC data. K Tech Ultra PRO's sales jumped 35 percent in 2005 on 2004, amounting to 64,221 units. The rise in the sales of desktops and notebooks was of 34.4 percent, with the notebook sales soaring 91.5 percent in the last two months of 2005. The results of an IDC study confirm the preference of Romanian customers for local brands, which partly explains why the "Ultra" brand topped the list, the Economistul reported. K Tech-Ultra PRO is one of the main players in the IT market in Romania, offering its customers access to high-quality products and services, to international well-known brands. The IDC study analyzes the trends in the IT&C sector in Romania.

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The aluminium producer ALRO based in Slatina (southern Romania) registered a preliminary net profit of 95 million euros on the first three months of 2006. ALRO reported a turnover worth 575.6 million new lei, as compared to 342.6 million new lei in the first three months of the last year. In the first three months of 2006, ALRO's expenditure increased by 89 million new lei as compared to the first quarter of the last year. The most important increases in prices were registered for the acquisition of energy and water. However, ALRO continues its investment program, which will boost the deliveries of manufactured goods with a high added value

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The inflation rate in Romania stood at 0.21 percent in March, while the average monthly rate January through March reached 0.5 percent, as compared with the 0.6 percent level in the same period last year, according to the data released by the National Institute of Statistics. The prices went up by 1.48 percent in March 2006 as compared with December 2005 and by 8.41 percent against last March. The food prices have increased most in March 2006 as compared with the previous month, by 0.42 percent. The non-food products prices went up by 0.11 percent only, while the services became cheaper by 0.44 percent. The prices of services increased by 9.79 percent, with the non-food commodities going up by 10.79 percent and the foodstuffs by 5.80 percent compared with March 2005.

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The medium net average salary will become 1,172 RON in 2010, 335 RON more than the estimated one for 2006, according to preliminary data from the spring prognosis. The gross medium average salary per economy will be 1,545 RON in 2010 as against 1080 in 2006. In 2007 the medium net average salary will register a 10.4% growth compared to 2006 and will be 902 RON net, in 2008 will it will grow by 11.1% to become 1002 RON while in 2009 it will grow by 8.7% and will be 1089 RON.

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Austrian-based Strabag wants to participate in the next five years in a project to manage the Buzau River, according to one of the company's board members, Manfred Weiss.
The project is being negotiated by Strabag officials with leaders of the Buzau County Council.
The operation also refers to the rehabilitation of the electric power plant located in Nehoiasu.

The Austrian company recently took over the Buzau Roads and Bridges Company. The contract between the two institutions shows that Strabag must invest a minimum one million euros into the company.
Weiss said that the stipulated sum will be surpassed within five years.
"We intend to invest in a new factory for the production of asphalt mixtures and spend several hundred million euros for the complex management of the Buzau River," said Weiss.

Strabag is one of the companies owned by the construction company Bauholding Strabag SE.
The company is involved in the construction of the Bucharest-Brasov highway project, which was frozen in 2005 because of controversies regarding tendering procedures.
The highway project involved three construction companies: French-based Vinci, the group formed of Ashtrom and Roichman, and the Austrian company Strabag.
Strabag would have built the Bucharest-Ploiesti section, Vinci the Ploiesti-Predeal section and Ashtrom-Roichman the Predeal-Brasov section.

The Bucharest-Brasov highway is to be 127.5 kilometers long and total costs of the project are expected to exceed one billion euros.
The companies assured financing and said they would recover the costs in 30 years from budget funds. Representatives of the construction companies threatened to use all legal means to ensure the government does not renege on the contract.

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Petrom, of the Austrian group OMV, rented 7000 square meters of office space in the Bucharest Business Center, near Piata Victoriei, announced Tuesday CB Richard Ellis, the real estate company in charge of the transaction.
Petrom will operate on 8 of the 14 floors in the building, owned by the Austrian company Immunoeast.
In terms of rented area, the transaction between Petrom and Immunoeast is the most significant registered in 2006 on the Romanian real estate market.
In January 2006, Petrom stated that a new office building would be put up in Straulesti, in the north of Bucharest.
The total surface area will amount to approximately 200,000 square meters and will include offices for the future main headquarters of Petrom. The first stage of the project will be completed at the beginning of 2008 and will allow the relocation of 1,700 employees, the final stage will be completed in 2009.

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Electromagnetica recorded significant growth in 2005 on almost all areas compared to previous years, according to Eugen Scheusan, chairman of the company. Turnover increased by 92 percent in 2005, to 109.7 million RON, as production shifted towards the manufacturing of electrical equipment, plastic and metal subcomponents for car producers like Fiat, Ferrari and Dacia.

More RomTelecom broadband users

RomTelecom estimates the number of subscribers to use broadband services will grow from 40,000 to 150,000 by yearend.
As the demand on the broadband market is significant, the company targets 600,000 users for 2007.
In 2005 the company launched the Asymmetric Digital Subscriber Line (ADSL) Internet access service which provides unlimited traffic and data transfer speeds of up to 1,024 Kbps.
According to company officials, RomTelecom will extend its ADSL coverage to 90 cities nationwide, especially in county capitals by yearend.
Due to high demand, the company will launch an Internet and voice service pack in the next two months.
Data transmission activity is the most profitable, as the voice segment has registered losses due to low subscriptions and mobile telephone competition.

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Profit tax rates are continually decreasing in all European countries due to the competition among EU member states for jobs and capital, as well as to the economic liberalization, shows a study conducted by KPMG International.
A simpler tax system can be as important as a competitive system of tax rates, considers Victor Kevehazi, senior partner with KPMG Romania.
"Romanian companies must submit profit tax statements quarterly. In most of the EU countries, these statements are submitted only annually, and throughout the year payments are made in advance based on estimates", added Kevehazi.
He said that the Romanian government should fix this anomaly to make life easier in the business environment.

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The aluminum producer Alro Slatina declared on Tuesday a 26.6 million euro profit for the first quarter of 2006, seven times larger than the same period of 2005, and a rising turnover from 96.2 million to 161.7 million euros.
The Vice President of the Board of Directors Marian Nastase considers that the positive evolution is based on the substantial price increase for aluminum on the international markets, which limited the negative influence of production costs rising.
"Compared to the previous year, prices have increased by approximately 300 dollars per ton due to the deficit of aluminum and aluminum alloys.

Under these conditions the impact of increased production costs has diminished", said Nastase in a statement.
Alro's expenses went up during January-March 2006 by 25.5 million euros compared to the same period of 2005, the most significant increases being registered for electric energy and water supplies, of 3.4 million euros.
Alro Slatina announced last week that it would invest 25 million dollars in new equipment used in the production process.
Last year Alro had a turnover of 446.5 million euros and a net profit of 32.6 million euros.
Alro Slatina, the aluminum producer Alum Tulcea and the producer of aluminum alloys Alprom might merge until the end of 2006.

The merge of the three companies is in accordance with the aluminum industry trend of vertical production integration.
The main shareholder is Marco Industries, owning together with Conef Bucuresti, 88 percent of Alro.
In its turn, Alro controls 92.5 percent of Alum Tulcea and 96 percent of Alprom.

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Home appliances and IT & C distributor Altex will open on Wednesday the tenth Media Galaxy unit within the Feeria mall located in Baneasa area. The investment...

Holcim Romania, the domestic branch of the Swiss producer of construction materials, last year derived net income standing at 33.3 million euros (120.6 million RON), which accounts for a net margin of approximately 19% against turnover. Compared with 2004, the Swiss company's income in Romania advanced by 43%.

Orkla Foods Romania (OFR), the branch of Norwegian giant Orkla Foods posted a 33% increase in sales in the first quarter, based on the results of the company's newest brand, Ardealul. "The changes and strategic decisions over the last two years are starting to pay off," says Aliz Kosza, chief executive of Orkla Foods Romania.

The National Authority for Fiscal Administration (ANAF) sold 15 million euros worth of railway engines and wagons belonging to the Romanian Railroad Company (CFR) to Unicom Tranzit, in order to partially recover CFR's 66.7 million euro debt to the state.
ANAF decided in February 2006 to sell 77 CFR railway engines and 98 CFR wagons, estimated by an expert to be worth 5.7 million euros.
Unicom Tranzit won the first auction but did not pay in time. At the second auction the company was successful again and paid the total amount of about 15 million euros. Unicom Tranzit is part of Unicom Holding which has many companies in different fields of activity.
Based on CFR data, Unicom Tranzit is one of CFR's most important partners in the transportation field.

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The RON continued to appreciate after the foreign investors launched large purchase orders.
Dealers believe that foreign investors were attracted by the deposit certificates tender held this week by the National Bank of Romania (BNR).
The listings were of 3.490-3.495 RON per euro at the beginning of the listing session. After a slight increase if the listing, to 3.505 RON per euro, on the market appeared the large sale orders of foreign currency, mainly from foreign investors.
The growth of sales fluctuated, indicating that investors were also interested in buying foreign currency.
The tendency of the exchange rate to decrease was maintained by the end of the day when the euro was listed at 3.490-3.495 RON.
BNR announced an exchange rate of 3.4946 RON/euro, under the reports issued on Monday.
The American currency showed a close progress to the one euro had, at a report of 2.8827 RON/dollar.
The interest rates for the one day and one week term of payment deposits, on the monetary market, maintained at 7.5-8.5 percent.
BNR will hold a tender on Thursday for deposit certificates that have a three months term of payment limit.

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The Romanian Commercial Bank (BCR) will handle the financial operations of the Proprietatea Fund after the Romanian National Securities Commission (CNVM) suggested that the fund give up the contract signed with CEC.
CNVM expects fund to be a depositary at the Stock Exchange in view of listing its shares and has selected BCR from a list of bidders, which also included HVB Bank Romania, Bancpost, BRD and Banca Romaneasca.
The Proprietatea Fund has a share portfolio comprising stakes in 114 Romanian companies and a nominal capital of 3.9 billion euros.
The capital will be later increased with other assets if compensation requests exceed the initial capital.
The fund was created in 2005 as a solution for the reimbursement of former owners dispossessed by the communist regime and to whom the restitution of goods cannot be made physically.
The fund is to be listed on the Bucharest Stock Exchange and on an international exchange.
Selection of the international financial consultant, which will arrange the drafting of the task book necessary for the designation of a company to manage the fund, will be performed on Monday April 17. Six companies have announced their interest in the bidding: Citigroup, Nabarro Wells& Co Limited, Forex Invest Online LLC, Reyl & Cie (France) SAS, Frank Russell Company and Savills London.

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The macroeconomic climate, a significant weight of inefficient companies and an incomplete and inappropriate legal framework are the elements that have limited the access of Small and Medium Enterprises (SMEs) to bank loans, said Daniela Niculescu, director with Finansbank, during a seminar on the financing of SMEs on Tuesday.
"Banks have a significant offer for SMEs, but few clients. The sluggish development of SME crediting has been the result of the macroeconomic climate and the instability of the business environment. For this reason, business plans submitted to banks had a high level of risk," said Niculescu.
The inadequate and insufficient legal framework as well as the inexistence of judicial procedures concerning the recovery of debts is an element that generated additional bank prudence in the relation with investors. More so, the large number of inefficient companies generated a reduction in credibility and consequently in that of SME crediting.
Furthermore, there is a lack of transparency between banks and companies. For more transparency, SMEs should develop entrepreneurship skills and better understand the way banks operate, while financial institutions should reduce bureaucracy and be more flexible, Niculescu added.
Among the elements that make SMEs unattractive for banks is the low degree of incorporated resources, the reduced level of financing sources as well as the limited duration of activity, argued Cristian Nae, representative of OTP Bank Romania.
Banks still charge high interest rates and therefore the high cost of financing is a hindrance for SMEs seeking to obtain bank loans, Nae added.
SMEs need to be ready for the accession to the EU, to be competitive and to prepare eligible projects in order to receive structural funds, stated Gabriela Vasile, vice president of the National Agency for Small and Medium Sized Enterprises and Cooperatives (ANIMMC). In her opinion, in order to achieve this SMEs need information together with access to consultancy services and loans.
Participants at the seminar concluded that 2006 is the "year of SME," as authorities and banking institutions are interested in this segment of the economy.

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Companies involved in the field of telecommunications and mailing services can contribute to the fund for the universal service proportionally with the revenues resulted exclusively from these activities, announced the National Authority for Communications Regulation (ANRC) on Tuesday.
The ANRC president's decision, which regulates the computing method for company contributions to the fund for the universal service, became effective last week.
Based on this regulation, companies will calculate their contribution to ANRC according to the revenues obtained from telecommunications and mailing services.

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Banca Romaneasca launched a new loan for personal needs.
The amount of the loan is 10,000 euros, with a ten-year maturity and 10% interest.
The loan may be obtained without collateral.
The purpose of the loan does not need to be documented and the monthly net minimum income of clients may be no less than 100 euros.
The bank takes into account any income that may be documented: salaries, pensions, rents, dividends and incomes related to collaboration agreements.
Banca Romaneasca is member of the National Bank of Greece Group (NBG), the largest bank in Greece taking into account its market capitalization of EUR 14 billion.
NBG is present in five countries in Southeast Europe, with more than 850 branches and a regional market share of approximately 10% in retail banking.

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Rent for street commercial and industrial spaces in Bucharest could drop starting this year after several real estate projects are finalized, shows a study issued by the real estate company CB Richard Ellis (CBRE).

The company stated that the future real estate project should determine a balance between offer and request.
"It is estimated that the request for street commercial spaces will lower because of the numerous projects for mega-stores, scheduled for delivery by the end of 2007. As result, the rent for modern downtown commercial spaces will reduce," shows the CBRE statement.
The company's analysts believe that approximately 300,000 square meters of modern commercial spaces will be ready by the and of 2007.
CBRE shows that in 2005 an important price hike was reported on the outskirts, where rents fluctuate between 20 and 50 euros per square meter.
In the secondary areas rents start from 30 euros and can go up to 60 euros per square meter.
In both areas rents should increase by 20 percent.
The rents for commercial spaces situated in malls situate between 60 and 120 euros per square meters while in the commercial galleries of hypermarkets these start from 20 euros and go up to 40 euros per month.
CRBE estimates that space entering the industrial sector will have in 2006 and 2007 an ascending trend, most of the projects having a surface between 20,000 and 30,000 square meters.
Rents are expected to decrease by four to 4.5 square meters, according to real estate annalists.
The CBRE forecasted a significant increase of this real estate sector for the following 2-5 years and projects amounting to one million square meters.
The existing spaces total 250,000 square meters to which add 200,000-250,000 located in old industrial areas.
The increase of terrain prices determined real estate developers to focus on the luxury sector that assures higher profits.

Real estate investment efficiency drops

CBRE issued a report in February in which it showed that the efficiency of investments in Bucharest office space decreased last year by 3.5 percent to 8.5 percent. The trend should continue in 2006 at a lower pace.
At the same time, efficiency of investments in Bucharest offices remain one of the most important in Europe after Sofia with 10.3 percent and Moscow with ten percent. For comparison Warsaw has an investment efficiency of 6.5 percent, Prague of 6.75 and Budapest of seven percent.
The investment's efficiency rate is calculated as a percentage difference between revenue generated by the space through sale or rental and the value of funds spent for its construction or acquisition.
On the other hand, real estate experts believe the level of rent on the office space market followed an ascending trend following the interest of Central and Eastern European investors in Romania. According to CBRE data, rent progressed in 2005 by 2.8 percent up to a monthly 18.5 euros per square meter.
Compared to other countries in the region, Bucharest is more expensive than Bratislava or certain major Turkish cities with monthly prices of 18 euros per square meter and Sofia with 13 euros per square meter. At the same time, it is cheaper than Budapest, Vienna and Warsaw with 20 euros per square meter.
CBRE representatives say the office space market of the Bucharest market attracted the attention of international investors and had a quick development in the last three years. Office space in Bucharest advanced in 2005 by 35 percent to approximately 820,000 square meters.
For this year, CBRE estimates show an increase of available office space by approximately 200,000 square meters. Half of it would already be rented, according to the company's estimations.
The report also suggests that the quality of office space improved as 40 percent of offers are Class A. The rental degree is good with over 192,000 square meters being occupied.
In early January British TV station Channel 4 quoted a study carried out by PriceWaterhouseCoopers (PWC), estimating the efficiency rate for real estate investments in Romania over the next ten years at 414 percent. European Union accession was seen as the main factor boosting the economic perspective for real estate investments.

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UPC Romania has taken full control of the DTH satellite TV operator Focus Sat, after having acquired 50% last year. According to sources close to the deal, the market value of Focus Sat now stands at 8-10 million euros.

Petrom will invest one billion euros over the next five years to retool and slash production costs of Arpechim Pitesti and Petrobrazi Ploiesti refineries.

Porsche Romania, the biggest domestic car importer, sold 150 units of the new Audi Q7 SUV model, half of the target the company had set for the entire year. The model was officially launched on Monday at a starting price of 50,000 euros including taxes, and the value of sold cars already exceeds 7.5 million euros.

The Dow Chemical Company (Dow) and Rompetrol Petrochemicals, a member of The Rompetrol Group, announced today an agreement for the manufacture and marketing of low density and high density polyethylene resins (LDPE and HDPE).

Rompetrol Petrochemicals will supply Dow with HDPE (high density polyethylene) and LDPE (low density polyethylene) resins, manufactured according to Dow's high quality standards and quality assessment and control practices over the following 14 years. Annual output is expected to reach 100,000, and deliveries to Dow in the initial phase of the agreement will total up to 60,000 tons per annum.

"This agreement underscores Dow's commitment to secure low-cost opportunities that will strengthen the company's position in key growth regions around the globe. It provides an effective way for our polyethylene business to develop new market opportunities in Eastern Europe, while better supporting a number of key customers throughout the area," said Markus Wildi, president of Dow Europe.

"The agreement leverages the strengths and qualities of the two companies. Dow contributes strong market knowledge, understanding of our valued customers' needs, and world class polyethylene process and product technology. This, combined with Rompetrol's strategic position in Eastern Europe and commitment to invest in petrochemical markets, will support the growth of our customers, particularly in Eastern Europe," Markus Wildi said.

Florin Andrei, CEO of Rompetrol Petrochemicals, considers that the partnership sparks the beginning of a major development age that will allow the company to become a key player in the region.

"We're very eager to commence cooperation with Dow, which offers us the benefit of top quality production standards, and implicitly strengthens our position as a significant supplier to the domestic market and also to markets to which we currently export our polypropylene output," Florin Andrei stated.

Rompetrol Petrochemicals will receive technical support, feedstock, and technical specifications for polymers from its partner. Furthermore, Dow will provide ethylene (polyethylene production feedstock) supplies to Rompetrol Petrochemicals until the Romanian company will start up its pyrolisis installation.

About Dow: As the leading global supplier of every major polyethylene (PE) resin family worldwide and operator of every major production process, Dow offers a wealth of product and technology solutions, providing customers with an opportunity for potential differentiation, growth and successes in existing and emerging markets around the world. Dow is a diversified chemical company that harnesses the power of science and technology to improve living daily. The Company offers a broad range of innovative products and services to customers in more than 175 countries, helping them to provide everything from fresh water, food and pharmaceuticals to paints, packaging and personal care products. Built on a commitment to its principles of sustainability, Dow has annual sales of $46 billion and employs 42,000 people worldwide.

About Rompetrol: Rompetrol Petrochemicals is Romania's foremost polypropylene producer, covering 64% of the domestic market. With 80,000 tons output capacity, the petrochemicals plant located at Midia N?£vodari had a turnover of USD 130 million in 2005, thus enjoying a 28% surge as compared to the previous year. The company produces a wide range of polypropylene grades (for injection and blow moulding, films, monofilaments, fibers and tape grades) and sells own products and a vast array of polymers (PET, LDPE, HDPE). Rompetrol Petrochemicals is a member company of The Rompetrol Group, Romania's biggest private industrial group, which posted a turnover of USD 2.34 billion in 2005 and conducting operations in 12 countries. Main operations comprise refining and marketing/sales of oil products, with adjacent interests in exploration, production, and further oil industry services such as drilling, constructions, transportation, etc. The group aims at becoming a leading integrated oil company in the region and to gain a strong position in the Black Sea basin.

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OTE, the largest telecom company in Greece, increased its stake in its mobile telephony division Cosmote to 66.49 percent, by purchasing a 2.35 percent share package on the Athens Exchange.
The 157 million euro transaction was closed at 20 euros per share.
Brokerage Company P&K Securities announced its intention to buy 3.89 percent of Cosmote shares, at 20 euros per share, for an unspecified client.

"OTE is examining the option of buying, during the timeframe of its (2006-2008) business plan, the remainder of the shares in Cosmote that it presently does not hold," OTE announced in March.
In the event OTE purchases the remaining 36 percent, its profit would advance by 12-13 percent, shows a briefing from the National Securities Company.

Cosmote shares closed up 2 percent on Monday, at 20 euros per share, while OTE securities increased 3.5 percent, to 18.96 euros per share.
The OTE group operates in Romania, where it controls 54.01 percent of RomTelecom shares as well as its stake in Cosmote.
The remaining 30 percent of Cosmote is owned by RomTelecom.

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Modernization works on the 210 MW power plant nr. 3 at the Mintia-Deva thermoelectric power station were completed yesterday after five years. The World Bank and the European Bank for Reconstruction and Development (EBRD) offered financing for 65 percent of the 100 million dollar investment, while the Romanian Government financed the remainder of the project. The rehabilitation works have not covered the desulphurating installations yet. This environmental measure is one of the stringent commitments Romania has made in view of joining the EU. The technical inspection began on Monday and the station could be operational at commercial parameters within a few months.

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The turnover of Electromagnetica increased by 92 percent in 2005, up to 109.7 million lei, as production shifted towards the manufacturing of electrical equipment and plastic and metal subparts for car producers, like Fiat, Ferrari and Automobile Dacia. The net profit increased from 660,000 thousand lei at the end of 2004 to 2.74 million in 2005. "After 1990, the telecom sector and especially Romtelecom was the spearhead of activity of Electromagnetica. After 2000, this market segment slowed down and our company switched to production for the car industry," said Eugen Scheusan, the company's director general. On April 6, shareholders decided to change the company's field of activity to the production of measurement, checking and control equipment.

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The hypermarket network Carrefour will expand next year by opening four new stores in Romania, of which two are in Iasi and one in Bucharest.
The total value of the investment is estimated at 80-100 million euros said on Tuesday the director of Carrefour Romania, Francois Oliver.
Participating at the opening of the forth Carrefour hypermarket in Bucharest, Oliver added: "Soon we will start to work on our four new projects. Carrefour has invested so far around 180 million euros in the six hypermarkets we have on this market in Romania. The latest store is located in Baneasa, being part of the Feeria commercial center, and required a 28 million euros investment."
He has not mentioned the location of the forth hypermarket planned for next year.
According to Oliver, the French company intends to have six stores in Bucharest in the following years and a total of 30-40 hypermarkets throughout the country.
Feeria is one of the most complex commercial centers from Central and Eastern Europe, including, along with the Carrefour hypermarket, a Media Galaxy store, other 77 stores some new on the Romanian market and four restaurants.
The project was developed by Soconac, a subsidiary of Vinci Construction Grands Projects Group, the total costs amounting to around 40 million euros.
Moreover, the building of two other stores, Bricostore and Mobexpert, will be completed shortly so that the total value of the Baneasa investment reaches 60 million euros.
This project is part of a greater development plan undertaken by Baneasa Investment and Baneasa Development.
Feeria represents the third major project developed by Soconac in Bucharest, after Victoria Tower, where the BRD - Groupe Societe Generale headquarters is located, and Orhideed commercial center.
Feeria has a total area of 36,000 square meters out of which Carrefour occupies 8,400 square meters.
The next hypermarket to be opened by the French network in Romania will be in Constanta this fall.
Francois Oliver, the current Director of Carrefour Romania, will be replaced at the end of April by Jacobo Caller Celestino, one of the managers of Carrefour Spain. (Ileana Boboc)

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Minister of Integration Anca Boagiu demanded the elimination of delays in the implementation of the tax monitoring systems

The tax collection system, delays in the adoption of the public acquisitions law, the status of the Court of Accounts, and the absorption rate of SAPARD funds are the main issues to be addressed before EU integration.
The statement was made by Minister of Integration Anca Boagiu at the end of Monday's meeting of the European Integration Executive Committee. The minister said the period remaining until the end of the year is just as important as the one that has passed since the signing of the Accession Treaty.

Boagiu reiterated that the Ministry of Public Finance (MFP) did not adopt measures early enough for the implementation of the interoperable system for the monitoring and collection of taxes and transmission to Brussels of data on value-added tax (VAT) income. Explaining that VAT was a constituent of the EU budget, she insisted that the system must be functional in order to allow Romanian and European authorities to exchange information. She argued that Romania could not benefit from similar information regarding the other member states until alignment procedures to the system are complete. Boagiu strongly recommended the MFP expedite the application of measures to solve the problem so that it does not turn into "a reason for discontent that would result in the activation of the safeguard clause specific to the internal market."

Minister of Finance Sebastian Vladescu admitted the delay during a meeting with the press last week, but claimed that it was also due to complications surrounding the verification of tender procedures requested by the EC delegation. European representatives eventually approved the companies - IBM and Oracle - appointed by the Romanian authorities following the tender. The systems were developed using PHARE funding, which stipulates certain procedural obligations that also take time, Vladescu argued.

He promised that tax-monitoring systems will be functional on January 1, 2007. Several phases were established for the implementation of the systems, so that the pilot program is functional by July 1 and the whole project by the end of the year.
The minister of integration also kindly demanded her colleagues in Parliament to understand the importance of the public acquisitions law and ex-ante controls (which are controls based on estimations of parameters yet to be measured) and approve them urgently. Boagiu urged them not to repeat the situation that occurred at the endorsement of the law regarding the employment of expert personnel, which was eventually rejected.

Then the minister referred to the law on the status of the Court of Accounts, which in her opinion should have been approved immediately following the endorsement of the new constitution. "This institution must have auditing prerogatives. I know there are pressures from the court to avoid this responsibility, I know everyone there will hate me tomorrow, but that is it," said the minister.

The minister also voiced her dissatisfaction of SAPARD (Special Accession Program for Agriculture and Rural Development) funds beneficiaries who claim that, in order to be eligible for grants, they were required to present documents that the Applicant's Guide did not mention. Boagiu demanded the SAPARD Agency and the Ministry of Agriculture elaborate a set of measures for the increase of the volume of contracts.
Another necessity for the administration is the signature of the multilateral 'Green Card' agreement before accession, on the basis of the number of insured cars. Boagiu specified that at this point, the Auto Insurance Surveillance Commission did not have the necessary data for the signature of the agreement.

However, the government's official expressed her optimism about the European Commission's country report to be elaborated next month. "I do not see any problem in becoming a member of the EU, but I do foresee problems in effectively using the European funds if local institutions do not do their jobs," commented the minister who was to meet in Brussels yesterday with the representatives of the Enlargement Department of the European Commission.

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The Romanian business environment started being stable and the foreign direct investments will go on for another five years at the same pace after the accession, general secretary of the Association of Turkish Businessmen in Romania (TIAD) Guven Gungor told Rompres, ACT Media news agency reports.


He said that the foreign direct investments will go on at the same pace for five years at least after the accession and five years later the pace will slow down.

In ten years, the market will be more stable.

"Considering Romania's economic situation in the 90s and the transition Romania had to be through, the Romanian business environment was a difficult one because of the very rapid changes in legislation.

It was difficult for investors to follow these changes, to change their production," explained Gungor.

Still, he admits that it was a normal phenomenon and that at present the situation is more stable.

According to Romanian statistics Turkish investments in Romania amount to 480 million dollars, but considering what the TIAD representative said, the real value of investments is 1.4 billion dollars.

The big Turkish investors are Fiba Group, Prolemn, Ozer, Finansbank, Azomures, Arctic, Garanti Bank, Rulmenti in Barlad (eastern Romania), Erdemir Romania, etc.

Guven Gungor believes that there are fields with which the investors are dissatisfied such as the security of work permits, of the residence ones, things made easier for investors or the removal of bureaucracy like, for instance, for the reinvested profit.

He thinks that the flat tax being adopted again was a useful measure as it motivated the investments and the fiscal code should be stable and include long-term predictions.

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Romania ranked 27th in the league of the world's largest 30 commodity importers in 2005, according to a report of the World Trade Organization (WTO). The value of acquired goods attained 40.5 billion dollars, representing a 24 percent increase over 2004. The share of Romanian imports in the total of global imports was 0.5 percent.
As for exports, Romania did not make it into the first 30 exporters. WTO data excludes trade operations among the member states of the European Union.

The world's largest importer in 2005 was the United States with a 21.4 percent share of imports totaling 8,093.3 billion dollars, 15 percent more than in the previous year. In the second position was China with a 9.9 percent share of global imports, amounting to 1,732.7 billion dollars, followed by Japan with 7.7 percent of global imports and a volume of 516 billion dollars. The exports of EU member states outside the union increased by ten percent in 2005, to a total of 1,327 billion euros and a share of 17.2 percent.

At the level of Southeastern Europe commodities exports increased by 17 percent in 2005 while imports progressed by 18 percent, to an amount of 219 billion euros. At the same time services exports produced an income of 52 billion dollars while imports cost 29 billion dollars.

Global trade increased by six percent last year, after a nine percent growth in 2004, according to the WTO. For this year, the organization estimates an advance of commercial transactions by seven percent and calls attention on certain issues that could influence negatively that trend, such as the price of oil, the low demand on the American market and the impact of interest rates. "The world's economy is facing important changes," said the WTO general director Pascal Lamy.

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Only 2.24% of the Romanian small and medium-sized enterprises (SMEs) have accessed European funds and non-reimbursable funds from the State Budget, Secretary of State with the Ministry for European Integration (MEI) Leonard Orban stated in a seminar on the impact of the European integration on small and medium companies, Nine o'Clock reports.


?This is a very low access rate, which is why SMEs should be better prepared to attract the structural funds that will be available starting 2007,? Orban, also the chief negotiator of Romania with the EU, pointed out.

He said that small and medium companies should focus more on developing their operations and less on consumption, while on the other hand preparing viable projects that may become eligible for funding and the funds needed for co-financing such projects.

?Profit should be channelled into development rather than consumption, without money for development and co-financing companies will not be able to cope with the competition in the single market,? the MEI official emphasised.

He added that there were extensive periods during which facilities were granted to SMEs, but very few companies took advantage of these.

?SMEs must first of all be familiar with the legislation on taxation, on public procurement and on State-funded aid. To say that you don?t know the acquis communautaire is to say that you don?t know the Romanian legislation,? Orban added.

As for the legislation in the taxation field, Orban pointed out that few truly know it.

?Stop insisting for a zero per cent VAT quota, because the EU legislation stipulates the lowest VAT rate is five per cent, and only for a list of strictly defined products. Entrepreneurs must know this,? Orban also said.

Nonetheless, the MEI official is optimistic with respect to the number of small and medium enterprises which will survive the European integration process.

?I don?t agree with pessimistic scenarios according to which dozens of thousands of companies will go bankrupt after the accession.

In his opinion, the most affected companies in the SME category, expected to reduce their contribution in economy or even disappear, are the ones operating in the mining and the textile industry.

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The European Union praised Romania on Tuesday for efforts to improve its once terrible environmental record but urged it to cut pollution and implement modern waste management strategies to prepare for accession.

The Black Sea state, still strewn with communist-era factories built by the megalomaniac dictator Nicolae Ceausescu, has until mid-May to convince Brussels that it is fit to join the bloc in January. "Romania has made real progress especially in terms of putting in place the necessary administrative arrangements ... but of course a lot of problems remain," EU Environment

Commissioner Stavros Dimas told a news conference. Dimas said Romania would play a key role in the European Union in efforts to protect the continent's biodiversity because of its unique natural resources. Some of Europe's most biodiverse regions are in Romania, including the Danube delta, a key migratory route for wild birds, and the unspoilt forests of the Carpathian mountains.

The delta, an UNESCO world heritage site since 1991, is home to more than 280 species of birds as well as 45 freshwater fish species in its numerous lakes and marshes. More than half of Europe's brown bears also live in Romania and about a third of the continent's wolves and lynx. Romania along with its southern neighbour Bulgaria missed the first wave of the eastward enlargement in 2004 due to slow reforms. The EU can still announce a one-year delay to its entry on May 16 if does not see enough progress.

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Banque Nationale de Paris (BNP) Paribas, one of the world's largest financial groups, will enter by this summer in the Romanian insurance market with its own specialised company, said sources close to the French group, ACT Media news agency reports.


BNP Paribas, that holds the consumer credit business Credisson, will enter the market via a greenfield unit set up through its insurance subsidiary Cardif.

In the long run, the French plan to establish in Romania an integrated network of financial services of which they already have the first link in place: the consumer finance entities; the second will be insurance services.

Cardif filed the necessary documentation to obtain the license from the Insurance Monitoring Commission.

The French will ensure the backup for Credisson with three policy types: for short-term unemployment, disease and temporary work incapacity, specify the quoted sources.

BNP Paribas acquired one year ago the consumer credit company Credisson through its specialised division Cetelem, under a deal worth a total of 47 million euros.

In 2005, the French entered the competition for Tiriac Bank and for Romania's banking leader the Romanian Commercial Bank (BCR), but failed in both takeover attempts.

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The Minister of Communications and Information Technology Zsolt Nagy and Franz Geiger, member in the Board of Directors of Siemens Ag Austria signed a cooperation agreement aiming at the development of the Romanian IT&C market, ACT Media news agency reports.


According to a Siemens representative, by signing this agreement, the Austrian group offers know-how for the development of the Romanian informational and communicational field.

Presently, over 1,600 Romanian schools have Siemens technology.

Franz Geiger underlined that Romania is the first country in Central and Eastern Europe with which Siemens company signed a cooperation agreement.

Siemens company has been operating in Romania since 1905 and has approximately 2,700 employees; the company is involved in transport services, energy, automation, medical solutions and communication.

In 2005, Siemens company registered 200 million euros in turnover and the number of the employees directly involved in the software development was 1,300.

Over the last 15 years, the Austrian investments in Romania amounted to three billion euros, which makes Austria the top investor in Romania.

In the information technology, other strategic partnerships were concluded between Romania's government and Oracle, Microsoft, IBM and Intel companies.

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Romania is below the European Union's average in terms of SMEs development, stated the head of Department for the coordination of pre-accession assistance and structural funds with the European Commission Delegation Giorgio Ficcarelli during a seminar on SMEs, ACT Media news agency reports.


The European Union has 52 SMEs per 1,000 inhabitants, while Romania has 14 SMEs per 1,000 inhabitants.

Romania also has a low rate of company establishment, said the European official adding that more entrepreneurs should assume the risk to set up companies and take advantage of the market opportunities.

Ficcarelli said that the EU includes 25 million SMEs, employing 100 million persons.

The SMEs account for two thirds of jobs existing in the private sector.

The European official said that the opportunities will surpass challenges, while the sums allocated for SMEs will exceed the 43 million euros allocated through PHARE programme over 2004 - 2006 period for SME competitiveness.

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BESTA ING, a company that is active in the metallurgic field and which is part of the BESTA group, will invest around $1 million into upgrading over the next three years. Thus, the company will replace the thermal treatment ovens, purchase new automated mixing equipment and filtering installations, Bursa reports.

The company also started formalities to get some of the environment and management certifications.

Paul Tudor, head of BESTA GROUP, said: "BESTA ING is a productive company and has a strong position on the market and orders for the exports.

The company has previously invested in equipment and in 2003 the company received ISO 9001-2000 certification.

The company is located in the industrial area of Iasi, on a 25,000 sqm plot.

Besta Ing has a production capacity of 1,800 tonnes per year for forged balls and 600 tonnes a year for shields and change parts.

The company employs 121 people. Paul Tudor said that for 2005, the company contributed with 10 percent at the turnover of BESTA GROUP.

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Italian-company SIAD will invest in the establishment of a natural gas production unit at Calarasi and in an industrial bottling capacity in Bucharest-based Militari area under a ¤30 million investment, Bursa reports.

The first construction will be established of the former Siderca platform in Calarasi and will cover the demands for liquid oxygen, nitrogen and argon.

The main contractor for these products is "TenarisSilcotub", one of the company's traditional partners.

The investment in Calarasi is justified by the immense opportunities in the areas, as numerous international companies have opened production facilities there.

The 25 million euro investment will establish more jobs and contribute to the development of a distribution network.

The production unit in Militati will be completed in July 2006, under a 5 million euro investment.

The two investments will make the company stronger on the industrial gas producers market.

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Romania on last Tuesday at the Public Finance Ministry headquarters signed an agreement on the extension of a loan worth 100 million euros designed for the financing of the project on the construction of the Brasov-Cluj-Bors motorway, reads a release by the Public Finance Ministry. The agreement was signed by Romania (represented by the Public Finance Ministry) as borrower, Calyon and Raiffeisen Zentralbank Oesterreich AG as arranger, Raiffeisen Zentralbank Oesterreich AG as facility agent and Raiffeisen Bank SA as agent and others. The 100-million-euro loan was granted on a12-year period, of which 4 years represent the grace period. The Public Finance Ministry was authorized under the Government's Decision 871/July 29, 2005 to contract the foreign loan worth 100 million euros.

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Leonard Orban said that SMEs representatives should focus on company development and leave aside the fraudulent practices.

Only 2.24 percent of the small and medium enterprises (SMEs) operating in Romania accessed European funds and state grants, according to a statement made Monday by Leonard Orban, the state secretary in the Ministry of European Accession (MIE).
"This is an extremely reduced percentage and that is why SME's must prepare well in order to attract the structural funds that will be accessible starting 2007," said Orban, who is also Romania's chief negotiator of EU relations.
The official believes that SMEs must focus more on business development and less on consumption and must prepare projects that will qualify for the funds.
"There are company managers that are more preoccupied with buying cars or building homes. Profits must focus on development and not consumption because without money for co-financing and development, companies will not survive competition on the single market," sated Orban.
The MIE official reiterated that there have been long periods in Romania in which SMEs could have benefited from financial benefits, but very few companies took advantage of them.
Orban recommended that representatives of SMEs learn the European Union acquis.
"SMEs must first know the laws settling the fiscal sector, those concerning public acquisitions and state subsidies. Those who say that they do not know the EU acquis, say that they do not know Romanian legislation," said the MIE official.
Orban underlined that very few SME representatives know the laws in the fiscal sector and recommended that calls for the annulment of the value-added tax (VAT) should be dropped.
"EU legislation contains the lowest VAT level, 5 percent, but only for a list of products that are very well-established. Entrepreneurs must know this aspect," said Orban.
The official warned that MIE estimates suggest that many SMEs will close after EU accession.
"I am not a fan of pessimistic scenarios that indicate thousands of SMEs will disappear after EU accession. In Poland, following the accession, only 4,600 SMEs were eliminated after the first post-accession year, meaning 0.1 percent of the total," said Orban.
The official believes that any large investment makes room for several SMEs.
"We will see an important development of SMEs in the services and car construction industry," said Orban.
Giorgio Ficcarelli, the chief of the structural funds and program coordination department in the European Delegation Commission in Bucharest, said that the SME sector in Europe is under the EU level, the largest problems being access to services, financing and information.
Ficcareli said that Romania is presently the country with the lowest rate of new companies.
"The average in the EU is 52 SMEs per thousand people, while in Romania the average is only 14 SMEs per thousand people," said Ficcareli.
One of the many problems SMEs are facing is the absence of a professional association.
At the beginning of the current month, the delegate minister for commerce, Iuliu Winkler, said that SMEs are the most vulnerable to EU accession shock and they must make greater efforts to survive after 2007.
"SMEs must associate either through the commerce and industry chambers or the associations in their sector, because, many times, SMEs do not have the administrative power to benefit from all information needed in time," said Winkler.
Winkler added that the Ministry of Economy and Commerce (MEC) initiated branding activities through the National Export Strategy (SNE) for domains that are significant Romanian exports: light industry, furniture, IT and communications.
The National Agency for Small and Medium Enterprises (ANIMMC) announced in March that SMEs will benefit this year from 1.4 million euros in financial support through a national, multi-year program which will run from 2006 to 2009.
The program will facilitate the access of Romanian companies on external markets by promoting their products and services, stimulating communication and business partnerships.
According to an ANIMMC press release, to be eligible for the program companies must have fully private social capital, no debts to the local or federal budgets, have a net annual turnover of less than 50 million euros and total assets under 43 million euros.

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The gross index of industrial production in Romania registered, during January 1-February 28, a growth of 3.5% as against the same period last year, whereas in the processing industry the gross index was of 103.4%, according to data provided by the National Statistics Institute, ACT Media news agency reports.


In February 2006, compared to February 2005, the gross index of industrial production grew by 2.9 percent.

The labour productivity in industry increased by 7.4 percent over January 1-February 28, 2006, over the first nine months of 2005.

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The trade exchange between Romania and Turkey is seen to exceed $5.0 bln (4.13 bln euro) in 2006, up from $4.16 bln (3.44 bln euro) in 2005, the Association of Turkish Businessmen in Romania said on April 11, 2006. The trade exchange between Romania and Turkey is forecast to reach over $10 bln (8.26 bln euro) in the next five years.


The trade volume between the two countries stood at $3.1 bln (2.6 bln euro) in 2004 and $1.8 bln (1.49 bln euro) in 2003.

Romania's exports to Turkey accounted for $2.19 bln (1.8 bln euro) of the total trade exchange between the two countries in 2005, exceeding imports by $220 mln (181.7 mln euro). Romania exported to Turkey steel, chemical, mining and plastic products and imported textiles, automotive and industrial equipment in 2005.

Turkish investments in Romania currently stand at $480 mln (396.4 mln euro), with major investors including Fiba Group, Prolemn, Ozer, Finansbank, Azomures, Arctic, Garanti Bank, Rulmenti Barlad, Erdemir Romania.

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The revenues of the state consolidated budget in 2005 increased by 17.9 percent in nominal terms and by 8.1 percent in real terms and the revenues coming from the tax on profit increased by 0.8 percent, according to what Bucharest Mayor Adriean Videanu told a TV broadcast. Concurrently with the increase in the revenues coming from the tax on profit, the revenues coming from the income tax decreased, but the ones coming from the other taxes increased. However, in the first two months of 2006, the financial results are superior to the ones of the same period of 2005, also said Videanu. Thus, the revenues coming from the tax on profit is bigger by 14.7 percent as against the same period of 2005 and the revenues coming from the income tax increased by 10.4 percent as against the same period last year. The private sector had the highest growth rate of investments in the last 16 years, 25 percent, foreign direct investments being at the highest level, almost 6 billion euros in 2005. Therefore, foreign investors trust what is called the business environment in Romania, which, to Videanu's mind, is the most important pillar of economic growth.

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Romania will become a target for the Moldovan wines in the next months, according to the wine producers from the neighbouring Republic of Moldova, on the occasion of the International Wines Contest held in Bucharest, April 6-9. The Romanian market has become more interesting after the Russian Federation in March stopped the wine imports from the Republic of Moldova and Georgia, arguing their quality is poor. "The reasons why the wine imports were stopped are political, so that we intend to bring wines to the Romanian market," marketing manager of Vinuri Nobile company Ruslan Gasca said. According to him, the Vinuri Nobile wines will be distributed on the Romanian market in a few months. "I believe that Russia will not change its decision, and this is a way by which we will strengthen our position in the Romanian market," Imperial Vin Moldova manager Vasile Stici said. According to the Moldovan producers, approximately 50-60 percent of Moldova's wine exports were directed to Russia.Other main destinations for the Moldovan wines are Germany, the Czech Republic, Poland, the United States and Bulgaria.

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Agriculture will no longer have red flags in the May report because of the progress made this year, according to Mugur Craciun, the secretary of state in the Ministry of Agriculture, Forests and Rural Development.Through the two payment agencies ? APIA and the Payment Agency for Rural Development and Fishing (APDRP) 40% of European funds for Romania will be oriented toward agriculture and rural development. Until 2013 Romania will absorb 12.5 billion euros. ?In the first year alone the two payment agencies in Romania will receive 1.2 billion euros, 500 million for direct payments and market interventions and 700 million euros for rural development and fishing?, Mugur Craciun said.According to MAPDR, 1.37 million farm exploitations with an area of 8.3 million ha out of a total of 1.55 million exploitations have been registered. Of the 1.37 million exploitations 65% have been introduced in the data base. For 2007 there are talks with the Ministry of Public Finance and the Romanian Government to allocate for agriculture a budget 1 billion euro higher than the present one. That budget will be needed to make national and European payments. At the end of the budget year Romania will present documents to recover these funds from EU budget, Craciun said.

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Hewlett-Packard (HP), Flamingo and K-Techtop sales top the Romanian computer market, says data of a U.S. IDC Research Inc. annual survey on the Romanian computer market. The Romanian brands have by far topped the foreign ones in the desktop category, the best sold computer in Romania. As many as 607, 567 PCs (desktops, notebooks, x86servers) were sold in 2005 as against 438,953 in 2004. HP sales totalled 68,647 units in 2004, followed by Flamingo- 67,485 units and K-Tech - 66,121 units. Romanians prefer domestic brands when they buy a desktop, so the Romanian brands rank in the top four out of five positions, namely K-Tech (a market share of 12.8 percent), Flamingo Computers (12.7 percent), Complet Electro Serv (11.8 percent) and Romsoft (11.1 percent). The Hewlett-Packard foreign brand comes 5th, with a market share of 9.5 percent

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Distrigaz Sud will assign annually approx EUR 100 M for upgrading and extending the distribution network, stated the company?s deputy general director, Dan Pintilie, Nine o'Clock reports.


The sums will come from banking loans and from own sources, added the representative of Distrigaz Sud. This year, there will be started a project for upgrading the distribution network, whose value reaches EUR 50 M.

This project, due to be finalised in five years, is supported through capital contribution worth EUR 180 M, brought by Gaz de France, the company that has been controlling Distrigaz Sud since 2003. At the same time, Distrigaz Sud plans to extend by over 400 km the network and the creation of new networks, an investment estimated at EUR 20 M.

At the same time, the company will change, starting July 1, the charging system, through the switch in the measuring gas consumption system.

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The Ministry of Economy and Commerce (MEC) wants to close cooperation contracts for 10 to 20 years with investors interested in modernizing and equipping mines.
Investors would have the obligation of renting a part of the mine's assets and pay a rent for every ton of ore extracted in a month.
Investors are also forced to maintain the same number of employees for a period of three years from the signing of the labor contract.
The first mining companies included in the program are Moldomin Moldova Noua, Cuprumin Abrud from which MEC already received offers.
The debts of Moldomin, Cuprumin and Minvest, amounting to 200 million dollars, will be cancelled, totally or partially, at the time of the property rights transfer in case of privatization or by the end of the year, provided that the companies pay their current tax liabilities. If the companies are privatized, the debts accumulated by the previously closed mines will be fully cancelled, leaving it for the state and potential investors to decide who will pay the overdue tax liabilities of viable mines.
Entrepreneurs from mining areas that hire and train unemployed persons will be granted state subsidies amounting to 1,200 dollars for each position that was occupied.
The National Agency for Mine Areas Development (ANDZM) launched the program called "The granting of non-redeemable state subsidies to local entrepreneurs, for hiring and training unemployed persons" last week.

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The turnover of companies operating in the retail sector rose by more than 27% in February, in comparison to February 2005, reveals data published by the National Statistics Institute (INS). At the same time, the increase in industrial output was only 2.9% in February, that is ten times lower than the consumption rise.

The UTI group, which is controlled by businessman Tiberiu Urdareanu and operates on the security services, IT&C and constructions market, plans to reach a turnover of 300 million euros by 2010, five times more than last year.

Damen Galati Shipyard last year derived gross income worth 6 million euros, similar to that of 2004, despite the value of deliveries the company made in 2005 amounting to 58m euros, about 18% lower year-on-year.

The Brasov-based Prescon group of firms has budgeted a 50 percent higher turnover for this year, according to businessman Ioan Neculaie, owner of the group. The Prescon Group comprises several firms in the construction materials market, the road transportation market and the hotel industry (Piatra Mare four-star hotel of Poiana Brasov). Recently, Prescon's portfolio increased by inclusion of Roman Brasov truck producer.

Trade relations between Turkey and Romania will register a strong development by 2010, coming close to 10 billion dollars, officials in the Turkish business environment consider. « For 2006 we estimate bilateral exchange to be over 5 billion dollars, but over a very short period of time, the following five years respectively, they will reach 10 billion dollars » stated the General Secretary of the Association of Turkish Business people in Romania /TIAD/ Guven Gungor.

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The government could modify, once every two years at the most, the minimum value of the nominal capital for a share company, commensurate with the rate of inflation, so that the amount would reflect the RON equivalent of 25,000 euro. The provision is part of the latest draft of the law project concerning companies, which should be debated in the months to come. In accordance with the project, the minimal capital of a share company should not be less than 90,000 RON (25,000 euro) and the minimum number of shareholders is two. Furthermore, the provision that established that the maximum number of administrators could be no more than 11 was eliminated. With regards to the minimum capital of a limited liability company, the amount can be no less than 200 RON and will be divided into equal stakes, which also should not be less than 10 RON.  In addition, in case of limited liability companies, the sole proprietor may become an employee.
The inflation rate is expected to reach 7.25 percent at the end of the year, reaching 6.5 percent only if the national currency appreciates fast and considerably, said the chief economist of ING Bank Romania Florin Catu, at the beginning of March.
The ING analyst believes the appreciation of RON will slow down in the second half of the year due to a higher demand for imports and the decrease of the foreign capital inflow.
In February, the inflation rate dropped to a record level 0.24 percent. The surprising development prompted analysts to reconsider forecasts by the central bank, carrying out a new increase of the intervention interest rate.
"Time is running out for Romania," said Mugur Isarescu, the governor of the National Bank of Romania in late February.
"The delays are taking their toll and we must become very ambitious," he added. BNR will not increase the five percent inflation target for 2006 and expects a small deviation over the mentioned target. According to the BNR official, a higher target for 2006 would bring a larger inflation than the one predicted for 2007. Isarescu made it clear that BNR will enforce its monetary policy. The central bank forecasts for this year a deviation of the inflation rate of up to 6.5 percent compared with the present target, according to Isarescu.

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Insurance provider Asitrans Bucuresti assesses a 13 - 14.4 million euro volume of subscribed premiums at the end of 2006, an increase of more than 66 percent compared to 2005. General Manager Bogdan Stan stated that this increase would result in a 1.2 percent share of the insurance market. Asitrans also intends to expand the regional network from 65 to more than 75 agencies, increase the volume subscribed through brokers from 25 percent to 30 percent, and launch new products.
Asitrans launched on Monday New Casco (an optional insurance for cars), which includes two new services: 24-hour free towing and temporary replacements for damaged cars. Casco policies accounted for less than 10 percent of all active company policies in 2005, a number which Asitrans hopes to increase with the introduction of the new product.

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At the beginning of April Petrom replaced the fuel range sold on the Romanian market with new types of fuels having lower sulphur content, which are compliant with the Euro 4 norms of pollution reduction.
Jeffrey Rinker, in charge of Petrom's refining processes and petrochemical products, stated Monday during a press conference that the new fuels are a result of the introduction of new technology and modernization of Petrobrazi and Arpechim. Investments will be made in these two refineries totaling approximately one billion euros until 2010. Rinker added, "We are trying to produce fuels which will become mandatory from 2007 in advance."
The company announced the start of a 42 million euro project in Arpechim Pitesti for the reduction of fuel sulphur content. The first fuels low on sulphur, Top Premium 99+ and Top Nordic Diesel, were launched in May 2005 and January 2006, respectively. 
The modernization processes for refineries Arpechim and Petrobrazi Ploiesti, having a processing capacity of eight million tons/year, consist of introduction of new installations for diesel and gasoline processing. The main objective of these processes is to increase the refineries' production capacity to 95 percent compared to the current 80 percent.
Petrom's investment plans till 2010 also include building 250 Petrom V gas stations, out of which 40 are scheduled for 2006. In addition, the company intends to raise the number of operating units managed in a Full Agency System from 100 to 300. Through this system the operating units' assets remain in the company's property, but the distribution stations are operated by a private administrator.

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The Competition Council opened an investigation in the natural gas sector concerning the possible infringement of provisions of the competition law by Distrigaz Sud. The investigation began following a complaint in which Distrigaz Sud had been accused of a possible abuse of its market leader status on the natural gas supply and distribution markets. The investigation targets equitable consumer access to the distribution and supply of natural gas, said Competition Council President Mihai Berinde. It seems that Distrigaz Sud has not respected certain criteria concerning non-discriminatory access of different consumers to the supply of natural gas. Distrigaz Sud recently announced it would make yearly investments of 100 million euros for the rehabilitation and extension of the distribution network. The five-year project will receive 180 million dollars in financing from Gaz de France, the company that has owned Distrigaz Sud since 2003. Moreover, the company plans to extend its existing network by 400 kilometers and set up new networks in a 20 million euro investment. Distrigaz Sud operates in 20 counties with a cumulative population of 11 million people.

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The Austrian group Wiener Staedtische will acquire the 21% Omniasig stake held by BCR, thus increasing its share to 93.61% of the insurer, ACT Media news agency reports.

Wiener Staedtische has progressively rounded off its Omniasig stake to the current 72%, by purchasing several minor stakes for about 4 million euros.

?The consolidation of our position on the Romanian market is economically justified.

Gross underwritten premiums increased significantly, the market share is rising and Omniasig is one of the major companies in the country,? Wiener Staedtische CEO Gunther Geyer told Ziarul Financiar.

In their turn, the BCR representatives declared that ?the sale of the Omniasig stake is a decision resulting from the group?s restructuring and consolidation strategy.

From this standpoint, it is yet another step we take after we sold our stake in Omniasig Life Insurance.? Omniasig closed 2005 with a turnover of 116 million euros, by 57% higher than in 2004.

The company increased its share of the all-risk insurance market to almost 12% in 2005, from 11.1% the year before. In 2005 the company reported a gross there-quarter profit of almost 1.5 million euros.

Wiener Staedtische controls the companies Unita, Agras and Omniasig Life.

Indirectly it is also present among the shareholders of Omniasig Addenda, where it holds stake through Omniasig Life.

According to estimations, the turnover of the companies controlled by Wiener Staedtische in Romania was last year higher than 215 million euros, placing the group second after Allianz Tiriac (that reported a turnover of 238 million euros).

The group announced that Iulian Mihai, who was so far Omniasig general deputy director, is to replace Dan Odobescu in the position of Unita president and general director, whereas Omniasig Iasi director Mircea Arsene replaces Daniel Stan in Unita?s Board.

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The top eight banks in Romania account for approximately 90 percent of the profit registered in the entire national banking system, while the first ten banks hold 80 percent of the assets, Bursa daily reads. The Romanian Commercial Bank (BCR) made a significant profit in 2005, at 202 million euros, and had a large market share, of 25.7 percent.


BCR's profit accounts for more than one third of the Romanian banking system. The profit of the Romanian Bank for Development (BRD) - Groupe Societe Generale, the second-largest bank by assets (15 percent of the market) was 165 million euros last year. Almost half of it will be directed towards the bank's shareholders.

The third bank in the system, Raiffeisen announced a net profit of approximately 51 million euros in 2005, which is double as against 2004.ING Bank registered 17 million euros in gross profit, which is half the 2004 profit, as a result of the important investments that the bank had made for increasing the number of its local units across Romania.

HVB Bank, even if it had had a smaller market share that ING Bank, nevertheless obtained a net profit of over 40 million euros in 2005. On the other hand, Bank Post, the sixth bank in the system by assets (4.5 percent) sustained losses worth 2.2 million euros, mainly due to lay-offs, the bank's management said.

The Romanian Savings Bank CEC has continued to see its market share shrinking, from 5.7 percent in 2004 to 4.4 percent in 2005; however, CEC succeeded in ending 2005 with a gross profit of approximately 20 million euros. Transilvania Bank, the biggest bank with a majority domestic capital, increased its profit last year by 64 percent against 2004, to 27.5 million euros. At the same time, the bank expanded its market share, by one percentage point, to 3.9 percent.

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The Romanian European Integration Ministry (MIE) invited project proposals for financing from the Joint Small Projects Fund of the Romanian-Bulgaria Cross-border Co-operation Programme that is designed mainly for small cross-border projects of the people-to-people type, MIE reports, ACT Media news agency reports.

Financing will be granted for sustainable small projects in the following fields: local economic development, including tourist development; measures promoting co-operation in the field of healthcare, particularly the common use of resources and facilities on cross-border bases; the development or establishment of facilities and resources for improving information and communications flows between border regions, including cross-border mass-media - radio stations, TV channels, print media and other media; cultural exchanges; employment, education and training; rural and agricultural development, with special emphasis on facilitating cross-border cooperation; business co-operation promotion, enterprise development, financial co-operation and co-operation between the bodies representing the business sector, for instance chambers of commerce.

The amount available for Romania is standing at 989,000 euros.

The financial grants under this programme will cover 90 percent of the eligible costs of the project and the project worth has to be between 10,000 and 50,000 euros.

The activities under these projects will have to be carried out in the Romanian-Bulgarian bilateral border area, in the following NUTS III-type areas: the Romanian counties of Mehedinti, Dolj, Olt, Teleorman, Giurgiu, Calarasi and Constanta and the Bulgarian districts of Vidin, Vratza, Montana, Velico Tarnovo, Pleven, Ruse, Silistra and Dobrici.

The applicant's guide is available on the web-site of the Romanian Ministry of European Integration (www.mie.ro), and further details can be provided by the Technical Secretariat of the Calarasi Regional Cross-border Co-operation Office.

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The National Agency for Small and Medium-sized Enterprises and Cooperation (ANIMMC) organises the symposium "Funding Programs for SMEs - Structural funds worth 30 billion euros assigned by the European Union between 2007-2013. The symposium is aimed at identifying the domains eligible for the financial schemes whereby structural funds are drawn in, the medium- and long-term effects of drawing in structural funds and the capacity of SMEs to draw in such funds, ACT Media news agency reports.

Another discussion subject is the support provided to SMEs by banks on the Romanian markets.

Expected to attend the works are Giorgio Ficcarelli, head of the Department for the coordination of pre-accession assistance, structural funds and domestic market programs of the European Commission's Delegation, Minister of Public Finance Sebastian Vladescu, Minister of Agriculture, Forests and Rural Development Gheorghe Flutur, Minister of Transports, Constructions and Tourism Gheorghe Dobre, Minister of Economy and Commerce Ioan Codrut Seres, Minister of Labour, Social Solidarity and Family Gheorghe Barbu and director of the National Guarantee Fund Radu Ignatescu Manea.

Also in support of the participation of the SMEs in EU-financed research programs, ANIMMC organised in October 2005 the seminar "Technological Supervision - Economic Intelligence - Innovation Management - Benchmarking," a manifestation where EU experts presented concrete aspects regarding the participation in Framework Programs 6 and 7.

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Convened in Strasbourg, the representatives of European Union institutions reached on April 4 a consensus regarding the 2007-2013 multi-annual financial framework that will be reflected by the Inter-institutional Agreement on the budget procedure; concretely, spending for the community multi-annual budget was increased by two million euros, informed the Ministry of Public Finance (MFP), ACT Media news agency reports.


The agreement was the result of discussions held in the so-called trialogue format: the Council (represented by the Austrian presidency), the European Commission and the European Parliament.

The agreement is an ad referendum act (provisory agreement) and needs to be unanimously accepted by the European Union Council (member states) and also needs to garner the European Parliament's majority votes.

Further to the agreement, the outlays for the multi-annual community budget agreed upon at the December 2005 European Council was increased by two billion euros (from the initial amount of 862.4 billion euros).

Another extra two billion euros result from the inclusion to the budget of extra-budget amounts (1.5 billion euros from the emergency aid fund and 500 million euros from savings with the outlays from the pension fund of community institutions).

The supplementary four billion euros plus another 2.5 billion euros from the increase of the reserves of the European Investment Bank will allow the re-launch of the Lisbon agenda. The supplementation of the community budget mainly aims the community programs for trans-European networks, research and development, competitiveness and innovation, territory cooperation, the preservation and management of natural resources.

This means that in the future, as a member state, Romania will have the possibility to access several community funds in its areas of interest, under the above mentioned programs, reads the MFP release.

The flexibility instrument for the interval 2007-2013 remains at the current level of 200 million euros a year. The funds left unspent can be carried over but must be spent within a two-year period (the n+2 mechanism) after the year of assignment.

Apart from the already mentioned funds, the agreement establishes a budget policy of improved quality, that provides a better assuming of responsibilities in the management of community funds by member states and the involvement of the Parliament in the revising of the community budget that will take place in 2009. In the first three years after accession, the amounts received by Romania are guaranteed under the Accession Treaty.

However, Romania wants to obtain as soon as possible a final inter-institutional agreement that should ensure the adequate framework for the settlement of post-accession funds. Referring to the agreement, European Commission president Jose Manuel Barroso underscored that "the outcome we have reached is better than that of the European Council in December and we will have the necessary funds available to encourage the 10 new member states and the two new countries that will join soon." In May 2006, in Strasbourg, the European Parliament will officially adopt the Inter-institutional Agreement in its plenary session. The negotiations for the 2007-2013 financial plans were a real test for the Union, because this is the first multi-annual budget reporting period that must meet the requirements and ambitions of a European Union enlarged from 15 to 27 member states.

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Stock Exchange transactions were extremely modest in the first week of April as the market?s liquidity slumped throughout the week, reaching on Friday a minimum slightly higher than 13 million RON. The bourse indices dropped by 2% in average, ACT Media news agency reports.


Despite the poor liquidity, the indices reinvigorated on Friday, mainly due to the companies from the banking sector:

Transylvania Bank (TLV) was the session?s most intensely traded issuer, with a turnover of 2.5 million RON.

Its shares kept for some time at 1.45 RON/share, but shortly bounced to 1.47 RON.BRD ? Groupe Societe Generale (BRD) had a better evolution, rising constantly and closing the day at 17.1 RON/share (+3%).

Setting off from the solid plateau of 0.0900 RON/share, Rompetrol Refinery Constanta (RRC) grew constantly until the middle of the session, reaching 0.0918 RON/share (+4.3%).

It was a good performance, yet not accompanied by an adequate liquidity (the traded stake was small, 8.7 million shares changed hands on the main market plus a Deal with 5 million shares for the price of 0.0905 RON/share).

SSIF Broker (BRK) was also among the most liquid shares, opening the session at 2.39 RON/share.

It followed a downward trend until the second half of the session and bounced again from the low of 2.3 RON, closing the session at 2.36 RON/share.

Apart from some fluctuations at the beginning and at the end of the session, the SIFs had a predictable evolution.

SIF Transylvania (SIF3) increased most substantially, by 2%, reaching 2.09 RON/share.

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Delegate Minister of Public Works Laszlo Borbely stated on Friday that works on the Transilvania highway will be resumed in a month's time and should be finalized by the end of 2012. The Ministry of Public Finance signed a credit contract last week with two international banks for the granting of a 100 million euro financing meant for Bechtel payments. The government will allocate a further 240 million euro for the construction of the highway. Construction works will start in Campia Turzii towards Cluj and in Bors to Bihor and Salaj counties. The Ministry of Transportation made the contract between the Romanian National Company of Motorways and National Roads (CNADNR) and Bechtel public, specifying that the renegotiation had targeted the altering of illegal provisions and the changing of the contract so that the Romanian party could make a more realistic projection of the cost of works.

In the new contract, provisions regarding the double indexing of prices (according to the price of raw materials and that of the CPI) were eliminated. The contract changes result in an overall cost reduction as the Romanian government no longer must grant a 250 million euro interest-free loan. This led to the reduction of some costs by 70 to 80 million euros. The procedure agreed upon stipulates that the Romanian State will grant a down payment of up to 30 percent of the annual value of construction works each year, which will be recovered from the payments for actual works.

The initial contract closed by the former government with Bechtel made it impossible for the Romanian party to control the cost of works, as most costs were under the control of the American company.
According to prior provisions, all aspects related to the exact tract of the highway were under the control of Bechtel, which would have allowed for an increase in costs.

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The Australian group has closed a contract with the Ministry of Defense for the construction of 10,000 dwellings and will close other agreements with the Bucharest City Hall and the Ministry of Administration, according to Romanian-born South Pacific Chairman George Prelea. At this point, four developments are in various completion stages in Straulesti, Ghencea and Tunari that involve a total investment of 140 million euros.
South Pacific Construction and Development CEO Andrew Prelea explained to Bucharest Daily News that the local market has been offering a 30 percent margin in real estate value appreciation for the last ten years, over a seven percent average at the global level. Prelea insisted on the importance of the industry and gave the example of Australia, which was kept out of economic recession by a strong real estate sector.

Real estate developers should rely less on big profit margins in their business plans and more in delivering quality products that would continue to appreciate in time, said the South Pacific representative. This would result in very advantageous deals for clients who will be encouraged to return to the same company for an upgrade, while renting the old place to partially finance a new one. When asked if he considered the possibility of the market suddenly dropping at some point, Prelea said it could happen only if profit margins became too high but even then, those wise enough to 'buy right' would be spared. At the objection that most Romanians were still too poor to 'buy right', he argued that in a few years things would improve significantly as the central bank will have to relax the population's debt policy. The South Pacific official admitted it was a good measure in the current situation, as it prevented a 'bubble effect' that would have disrupted the whole economy.

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Carpatair, is investing in the complete automation of its passenger services and back office functions in order to achieve significant savings in its annual GDS bill, through its acquisition of a large package of  solutions from SITA?s Horizon portfolio in a seven-year contract worth $10 million.

The tailor-made package of Horizon solutions will enable the phased introduction of e-ticketing, internet sales, on-line revenue management and enhanced passenger revenue accounting with a clear target to boost revenues by 15% and to achieve annual savings of $2 million on sales and distribution costs.

Nicolae Petrov, Carpatair CEO and President, said: ?Last year we carried 390,000 passengers as we grew by 30% for the fifth successive year. SITA?s Horizon portfolio recognises very clearly that passenger services and yield management are the key to business transformation and the future of airline distribution. Carpatair expects that Horizon will fuel our future growth and make us even more attractive to the travelling public.?

?We have been very impressed with the results achieved by some non-legacy carriers who have adopted SITA?s Horizon e-commerce platform particularly in the area of self-service and on-line bookings. Direct online selling will help us reduce distribution costs by up to $10 per ticket,? said Petrov.

Carpatair covers a network of 26 destinations in Germany, Italy, Romania, Moldova and Ukraine with a fleet of 17 Saabs and Fokker planes. The airline?s hub is Timisoara, Romania, from where it will soon be flying to Paris as well.

Ilya Gutlin, SITA Regional Vice President, said: ?This seven-year agreement speaks to the creativity at the heart of our Horizon portfolio which has great appeal for a fast-growing airline like Carpatair. Horizon supports a comprehensive airline distribution strategy that addresses self-service, yield and revenue management across all sales channels and customer touch points.?

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The Korean-owned Daewoo Craiova factory announced it has signed a contract on Friday with a Ukrainian plant for manufacturing 20,000 engines and gearboxes. The value of the contract was not disclosed but vice-president of Daewoo Automobile Romania Ion Ion said it was approximately tens of millions of euros. Minister of Economy and Commerce Codrut Seres stated that the Romanian authorities are hoping to take over the stock package from the Korean party by month-end. Seres announced that four companies have shown interest in the Craiova factory: Ford, Renault- Nissan, General Motors and a Chinese company which produces cars similar to the Matiz model. According to the minister, a partnership contract might be signed by yearend or in the first semester of next year.

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Distrigaz Sud will make yearly investments of approximately 100 million euros for the rehabilitation and extension of the distribution network. Bank loans and Distrigaz revenues will provide the financing. A 150 million euro project for the rehabilitation of the distribution network will begin this year. The project, which should be completed in five years, is supported by a capital contribution of 180 million euros made by Gaz de France, which has controlled Distrigaz Sud since 2003. At the same time, the company plans to extend the existing networks by over 400 kilometers and create new networks through a 20 million euro investment. The Distrigaz Sud investments for the rehabilitation of networks totaled 68 million euros last year.

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The debts of Moldomin, Cuprumin and Minvest, amounting to 200 million dollars, will be cancelled, totally or partially, at the time of the property rights transfer in case of privatization or by the end of the year, provided that the companies pay their current tax liabilities. The measure is part of the Ministry of Economy and Commerce's strategy for the restructuring and attracting of investments to the Moldomin Moldova Noua, Cuprumin Abrud and Minvest Deva mining companies. In case the companies are privatized, the debts accumulated by the already closed mines will be fully cancelled, leaving it for the state and potential investors to decide upon who will pay the overdue tax liabilities of viable mines.

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Aker Yards will begin construction in Romania of a ship used to supply maritime platforms stationed for oil drilling, at the request of Norway-based Offshore 8 KS.
The value of the contract amounts to more than 19 million euros.
Aker revealed in a statement that the bottom hull will be built in Romania and the ship will be equipped in Brevnik, in the UN administered Kosovo.
The ship is scheduled to be delivered in November 2007.
Aker is the owner of Braila and Tulcea shipyards.
The group owns other naval yards in Norway, Finland, Germany and Brazil.
Aker Brattvaag owns 70 percent of the Tulcea shipyard and a similar stake in the Braila shipyard.
Aker Yards in February received a record 900 million euro order for the construction of a cruise ship that will be delivered to the American-Norwegian group Royal Caribbean Cruises.

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Siim Kallas (left) discussed with Romania?s president Traian Basescu (right) about the necessity of improving the Romanian institutions that manage structural funds.

The European Anti-Fraud Office (OLAF) received more than one hundred notifications from the Anti-Fraud Department, in reference to the alleged poor management of structural funds by Romanian institutions, said on Friday the EU commissioner for administrative affairs, audit and anti-fraud, Siim Kallas.
Kallas said that 11 cases are being investigated by courts at the moment, while another 36 notifications are still under penal investigation.
Most of the alleged illegalities refer to Phare pre-accession funds. Kallas said that OLAF is satisfied with the involvement of the institution that manages EU funds, in solving these cases.

A report of Romania's Department for the Anti-Fraud Fight (DLAF) showed that the institution has launched 51 investigations on possible frauds concerning EU funds since the beginning of the year, 43 of which have been finalized.
The total value of the financing contracts that were verified amounted to one hundred million euros.
The verifications showed possible frauds in 26 cases, while another six projects financed through EU funds contained other irregularities.
Twenty-one files were sent to the National Anti-Corruption Office (DNA) and penal investigations have started in 11 cases.
Prime Minister Calin Popescu Tariceanu asked the DLAF to intensify examinations and to put aside any political factors that might interfere in the institution's activity.
Kallas said that to prevent fraudulent activity, Romanian institutions that manage structural funds need better surveillance training of clerks in charge.

The EU official said that a proper solution in the fight against fraud would be the creation of specialized agencies that would manage the funds and the personnel of these activities.
Kallas believes that the transparency of the decisions made by clerks should be guaranteed, in order to avoid conflicts of interest.
"We will need to know the economic interests of persons making the decisions," said Kallas, who offered as examples EU countries that require persons that have such positions to declare if they have invested in operations connected with their activities.
Kallas said that the people recruited to manage structural funds must be very well prepared; otherwise there is the danger that, because of poor management, some of the money in these funds would need to be returned.
Anca Boagiu, the minister of European accession, said that after EU accession, Romania would access structural funds for the construction of houses.
The minister said that the body established this financing possibility in the European budget that was approved for the 2007-2013 period.
"Our country needs houses and we must take advantage of this financing opportunity. The funds refer to urban development," said Boagiu.
The official said that Romania will benefit from new rules concerning structural funds because the existing ones impose the finalization of a project in a maximum period of two years.
Joaquin Almunia, the European commissioner for economic and monetary affairs, stated in February that The European Union is carefully tracking the economic policies in Romania.
"Ensuring that the personnel and necessary endowments for these structures works will allows us to obtain and efficiently use structural funds after EU accession," stated Prime Minister Calin Popescu Tariceanu after the meeting with Almunia. The European commissioner stated that Romania must improve its absorption capabilities for structural funds, which would contribute to the country's development. 
Almunia reminded authorities that the EU stands ready to ensure funds and compensate flaws in the infrastructure- part of which was a result of flooding last year- and develop it further. The funds could exceed 1.3 billion euros. Moreover, approximately six billion euros will be at hand between 2007-2009, in an effort to support Romania's growth and enhance competitiveness. Almunia encouraged the government to boost the economy to face double competition: from the EU internal market and from low-wage countries.
The commissioner recommended that the government pursue reform and privatization of the state-owned companies and promote high-quality governance standards for both the public administration and the business environment.
"Strengthening competitiveness and reaping the benefits of European integration are essential to the future economic success of the EU and to unleashing the growth potential of Romania," emphasized Almunia.

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The Ministry of Communication and Information Technology (MCTI) intends to select a consultant for the restructuring and privatization of the national company Romanian Post by the month-end, announced Minister Zsolt Nagy. MCTI received 23 letters of intent from investment banks which wish to provide consultancy. Interested companies for privatization are Credit Suisse First Boston, Daiwa Securities SMBC, FinansInvest, ING, PricewaterhouseCoopers, the consortium formed by CA-IB Corporate GmbH and NM Rothschild&Sons Ltd as well as Ernst&Young, the consortium formed by DZ Consulting and Raiffeisen Capital & Investment. Authorities intend to finalize the privatization process of the company by 2008 and to list the company on the Stock Exchange.

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Representatives of the National Chamber of Taxi Drivers in Romania (CNTR) said that foreign companies started being interested in taking over Romanian taxi companies but did not make any important acquisitions because they are expecting a change of laws that handle this domain.
"Many foreign investors, especially from Israel, Greece, Turkey, Austria and Italy, started showing their interest in taxi companies, especially in Bucharest, and require information about them. At the end of 2005 a company from Greece, named Olympos, bought two small companies, Bagheti Star and HMV and recently, another company bought Mavi Taxi," said CNTR's president, Ilie Anghel.
Anghel is also the general director of Cristaxi company.

The take over of a Romanian cab company is the only way of entering this market, in some cities (including Bucharest) because the number of licenses is limited and these were already given.
Anghel said that the transportation law was modified recently and another three law projects submitted to the Parliament by the National Liberal Party (PNL), the Democratic Party and the Social Democratic Party (PSD).
"All these projects simplify the application of the law regarding cab activities and support the idea that only Local Councils should give a taxi license. They also include the obligation, for the cab companies, of changing cars after shorter periods and establishing prices per kilometer that take into account economic criteria," said Anghel.

The cab activity is managed at the moment by the Romanian Road Authority and Local Councils.
The official said that many small cab companies, with less than 20 cars, are discussing with foreign investors about selling their companies and the take over attempts fail.

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The shareholders of the Romanian Commercial Bank (BCR) in the April 29th Extraordinary General Session will discuss the proposal made by the bank's leaders to launch a new bonds issue on the Romanian market.
BCR declined to say the value of the issue they will propose to the shareholders but it is expected that this would be of some several hundred million euros.
BCR, at the beginning of the year, anticipated a 300-400 hundred million euros loan needed to increase its assets in 2006.
The bank is in the last phase of the take over by the Austrian based Erste Bank.

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A cost-computing model developed by The National Regulatory Authority for Communications (ANRC) shows that interconnection tariffs for the Mobifon and Orange Romania networks must be diminished by 14.8 percent annually, until 2009, to reach a level that would reflect costs. ANRC suggests that the reduction be operated in four stages- July 1, 2006, January 1, 2007, January 1, 2008 and January 1, 2009- until the tariff is reduced to 4.39 US dollars. The figures could be modified after a round of public consultations. By means of interconnection, operators gain access to the communications infrastructure of other operators, making it possible for end-users to call subscribers of other networks.

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Italy?s Monte dei Paschi di Siena has decided to pull out of the race for the takeover of the Savings Bank ? CEC, the last major State-owned banking institution, said sources according to which the Italian competitor was considering this move since late 2005. The sales procedures reached the stage when the bidders should submit the final offer for the acquisition of 85% of CEC?s stake. After the non-binding offers were submitted in fall last year, it came out that the highest offered price was just a little above 300 million euros for 75% of the stake. After the bid was close to being suspended at the beginning of this year, Minister of Finance and president of CEC?s privatization commission Sebastian Vladescu announced that the bank will not be sold if the State does not get a good price for it.

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Investors have focused on residential units outside the city and on office buildings serving the city. ?Brasov Business Park, developed by Irish Ravensdale Investments, will provide the city with some 50,000 sqm of class A office space in four buildings on six floors,? representatives of Zoltim Haller, the agency promoting the project said.

Romanian companies made 11.6 billion euros in taxable profits in 2005, twice more than in 2004. The increase was largely due to the introduction of the flat tax, which pushed companies to bring a large portion of their revenues out into the open but also drove up the sales of consumer goods, cars and constructions supplies.

The need of coherence in real estate market regulations has been felt for some time and the prospects of EU accession imposes adopting concrete measures in this direction, Robert Teodorescu, director of Regatta real estate company said. The EU accession means Romania?s opening to a vast real estate market, harmonizing its regulations and the need to cope with competition, a press release shows. For that reason professional associations and unions in the real estate field have an important role in facilitating a correct functioning of the market.Professional associations and unions in the real estate field can direct persons in need of real estate counseling to accredited agencies. They can also offer a series of data about notary?s and lawyer?s offices , about the stages of real estate transactions, the means and duration of a real estate transaction. Another direction in which professional associations and unions should act is the promotion of real estate laws. Unfortunately we do not benefit from a real estate law at present.

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The National Bank of Greece (NBG) announced on last Monday that it was buying a 46 percent stake in Turkey?s Finansbank for $2.77 billion and would make a public offer to gain a controlling stake, informs AFX. NBG said it would go ahead with a planned $3.62 billion rights issue to help pay for the acquisition. With assets of about $66.35 billion, NBG is Greece?s largest financial institution, whereas assets, rank Finansbank fifth in Turkey with $14 billion as of year end, and eight by its market share ? 5%. Takis Arapoglou, chairman and chief executive of NBG, said that with the deal, the Greek bank was ?becoming a true regional player.?

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According to the data supplied by the National Commission for Projections (CNP) regarding the evolution of the Romanian economy by 2010, Romania's Gross Domestic Product will exceed 140 billion euros by 2010, the inflation rate will be 2.5 percent, and the number of the jobs in the economic sector will increase by over 300,000 .

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Sibiu based Ambient company has put some EUR 7 million in a commercial compound specialized in construction and interior design. With the official opening set for April 8, the compound gathers 1,600 suppliers with a more than 45,000 product portfolio.

The advertising agency Vitrina Advertising will develop a business centre in Cluj-Napoca, which will include both the company's headquarters, and a media centre, following an investment worth some 2.5 million euros. According to company officials, work is due to be completed in September 2007.

Romania's medicine producer Terapia saw a 30 percent increase in sales in the first three months of the year, compared to the same period last year.

Petrom, the biggest Romanian company, on Thursday announced that it had acquired 30 stations from MOL Romania, as well as MOL Aviation Romania, for which it gave 11 stations in return and paid the rest of the amount in cash.

The beer market will exceed the 800m-euro mark in 2010, with sales to grow at a 2-3% pace annually. While volume booms were registered between 2002-2004, a boom of brands included in the premium categories of the market is expected in the wake of EU integration.

Romania's medicine producer Terapia saw a 30 percent increase in sales in the first three months of the year, compared to the same period last year.

Terapia's representatives said that they were expecting an increase of this year's sales level estimated to USD 100 million to USD 110 million, 40 percent bigger than in 2005.

Ranbaxy Laboratories Limited has recently purchased Terapia, with a total investment value of USD 324 million, by taking over 96.7 percent of Terapia's shares, owned by the Advent International Investment Fund.

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The first mortgage bonds and mortgage deeds in Romania will be issued in 2007 at the earliest, Andrei Burz Pinzaru, manager with consultancy company Deloitte Romania, told Rompres on Thursday.

Pinzaru said the issue of such securities is not possible this year because the National Bank of Romania (BNR) and the National Commission for Securities first need to issue the relevant regulations and several aspects related to securitization, the tax code and accountancy also need to be clarified. "The accountancy and fiscal aspects do not have a significant impact in the case of mortgage bonds, but if BNR issues the regulations regarding the enforcement of the law by July, we will see the first mortgage bonds next year," said Pinzaru. He added that although in theory this could be possible right in 2006, the preparation of a bond issue takes longer.

The Deloitte Romania representative said that most likely, the first issuers of mortgage bonds will be large banks with foreign participation that operate in Romania, because presumably they have prepared the ground as regards in-company procedures in a manner that allows them to use more sophisticated financial mechanisms such as the mortgage bonds.

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The British State Secretary for Sustainable Agriculture and Food Lord Bach of Lutterworth, currently paying a visit in Romania, appreciates Romania's efforts in the field of agriculture for EU accession. "I was impressed by the progress Romania obviously made in the field of agriculture where there are many challenges. Romania had to undergo many difficulties in order to fulfil the requirements needed to become a EU member state," said the British official in a press conference.

"I saw a real engagement of the Romanian authorities on what remains to be done and I expect to continue the activity with the Romanian Ministry of Agriculture over the next few months," said Lord Bach of Lutterworth. The British official mentioned that progress is expected from the Payment Agencies and in the sanitary-veterinary sector, but stressed he is confident that the work will be done. The State Secretary said that the Romanian agriculture must reform, as there are more farms and farmers in Romania than in Great Britain, and the Romanian agriculture will have to compete with other European states. During his visit in Romania, Lord Bach de Lutterworth visited two projects financed by SAPARD programme, namely an ostrich farm in Giurgiu southern county and a meat-processing unit in Bucharest. Great Britain offers technical assistance in twinning projects with the Ministry of Agriculture or through bilateral projects, such as the establishment of the Payment and Intervention Agency, the creation of a carcass classification system and the improvement of animal health. The Romanian - British work group for Agriculture was set up in 2004 for knowledge and experience sharing. The fourth meeting of the group was held in London at the end of March.

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The total revenues collected by the National Customs Authority (ANV) from the import customs duties (customs taxes, VAT, excises), which go to the state's budget, increased by 40 percent in the first three months of this year, compared to the similar period of last year, reaching 4.626 billion euros.


According to ANV, the rise is mainly due to the improvement of the administrative capacity of the customs system and to a strict checking of the imported merchandise.

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A new energy company has set its sights on the Georgian market as the Romanian Oil Company Rompetrol is planning to develop a chain of gas stations in Georgia. At the moment, three company officials are here in Tbilisi: Rompetrol Georgia's General Director Adrian Elpujan, as well as two financial officers - Bogdan Ghita and Tatiana Sabura.

Rompetrol's Georgian partner is Trans Express, a company that owns 15 gas stations in Georgia. Rompetrol plans to lease out these gas stations from Trans Express and to completely re-brand them over the next three months, putting their logo and the Rompetrol name on the stations.

Out of the 15 gas stations nine of them will be located in Tbilisi and the rest in various regions of Georgia such as Rustavi, Khashuri, Natakhtari, Kakheti and Gombori.

Rompetrol's stated business philosophy is that it aims to improve the quality of life of the areas in which it operates. This means providing quality products, quality services, a quality environment and taking social responsibility as well and employing local population.

"Our motto is, 'Energy for Life!' because we are living in a modern society. Our major aim is to have high quality production, high quality service, to pay all of our taxes, to be a good social tax payer and to be involved in social projects and charities as well," Director General of Rompetrol Georgia Adrian Elpujan told The Messenger during an April 4 interview.

Rompetrol is the largest group of companies in Romania. It includes approximately 17 companies which are involved in regional markets ranging from Georgia to France and Spain. It has companies in Albania, Bulgaria, Moldova and is involved in a lot of businesses dealing with quality control, and oil exploration in Libya and Kazakhstan.

Rompetrol is a Romanian company but its head office is in fact located in The Netherlands. It has approximately 7 thousand employees throughout the world. Director General of Rompetrol Georgia Adrian Elpujan during his interview with the paper said that last year the turnover of the Rompetrol Group was nearly USD 2.4 billion. He added as well that it has become the first Romanian multinational company.

"The main activity of this multinational Romanian company will firstly be to be developed in those countries which are neighboring Romania and which are located in the Black Sea region. That's why Georgia was chosen - because it is situated in the Black Sea region. We are neighbors and we want to have good business relations with the Georgian market by bringing our 100 percent quality control, quality products and quality services. We know that quality guarantees and good service are very difficult issues here," explained Elpujan.

Elpujan mentioned as well that their products already meet European standards because they hope that Romania will become part of the European Union next year. A few days ago Rompetrol received special certificate for quality products, quality services and for protection of the environment.

The company is going to build its business in Georgia step by step. They are going to import petrol to Georgia from Romanian refineries. They do not have their own oil and they are buying it from the world market.

"We will practice a franchising system. We are renovating those 15 gas stations in Georgia putting our logo, our brand name, making our standards of service as well. This year we also will start to change the main equipments in the gas stations," Adrian Elpujan told the paper.

He also stated that their product was not so new for the Georgian market because their refineries have been working with Georgian partners for a few years including Canargo Standard Oil - although those companies were not buying 100 percent from them but from different suppliers as well.

In his interview with The Messenger Adrian Elpujan said that Rompetrol Georgia would start working with 4 or 6 completely re-branded gas stations and with others partially re-branded. It already has an oil warehouse near the airport that has approximately 10 thousand tons of capacity. Also from that warehouse and from a Batumi warehouse they will be able to sell the oil to the owners of other gas stations.

"This will be a wholesale operation. We will sell the product from gas stations and through these warehouses as well. We will have competitive prices and provide good quality," said Elpujan.

At the end of the interview Rompetrol's general director optimistically stated "We will have no competitors in Georgia but we will have partners."

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The share of modern commercial centers in the local consumer goods sector rose to one quarter of the market in 2005, according to the Shopper Trends study carried out by ACNielsen presented yesterday in a press conference. If in 2003 supermarkets and hypermarkets represented only ten percent, their share attained 23 percent two years latter. Romania is still on one of the last countries in Eastern Europe at the number of modern shopping centers per 1,000 inhabitants, but at the same time it has one of the largest growth rates in both commercial units and income.

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The activity of Transgold, the only company that extracts gold from locally exploited ore, was suspended after a control of the National Environment Guard (GNM) inspectors. Transgold representatives were also fined for failing to comply with the environment norms, as stipulated in the authorization issued by Maramures County authorities, according to sources form GNM.

Inspectors found that the company did not invest the almost 715,000 euros it was supposed to allocate to the installation of a used water purifying station and of a device for the automatic dosing of cyanides.
Transgold was fined 21,300 euros and had its production process shut own. Moreover, inspectors demanded local environment authorities to suspend previous authorizations.

According to sources from GNM, Transgold was not closed infinately but estimated it was unlikely that the activity would ever resume, as the company does not have the financial resources to make the necessary investments.
"Transgold lost a trial through which it was forced to function at a very limited capacity, so the delays accumulated in the last years in investments for environment compliance cannot be recovered," explained the same sources.
Transgold leadership has already demanded the beginning of legal reorganization and bankruptcy procedures before the courts.

A Hungarian court decided last October to maintain the reduction by 85 percent of the production of Australian-Romanian mining company. The decision was final and was the result of the ecological disaster produced in Hungary by the legal predecessor of Transgold, the Romanian company Aurul. In 2000, Aurul caused a leak of cyanide and heavy metal waste into the Somes and Tisa rivers, which led to the pollution of hundreds of kilometers of the Hungarian waterway network.

Hungary also raised concerns about the opening of a gold mine in Rosia Montana, 190 kilometers east of the border with Hungary. An international team of experts made an environmental impact assessment on Rosia Montana and will soon submit their findings to the Ministry of Environment, according to the Canadian company Gabriel Resources, which plans to extract over 300 tons of gold from the area. The project is also contested by several environmental organizations as it implies the use of cyanides once again and removal of archaeologists, as it would require moving several archaeological vestiges in the area.

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"Show some solidarity and spend your holidays in Romania," said Ovidiu Marian, the president of the National Tourism Agency (ANT), to the people present at the National Tourism Fair.
The event is being held at Romexpo, from April 6-9.
Marian said that the agency is promoting internal and incoming tourism (foreign tourists coming to Romania) and we support companies in their endeavors.
"It is the first time since 1989 that the government has deemed that ANT should be involved in investment programs, allotting 325 million euros for five projects. It is the first time that we will have a 7.5 million euro promotion fund," said Marian.
Tourism agencies will offer charter flights to 40 destinations abroad this year, most of them to Greece and Spain, according to the companies present at the National Tourism Fair. This total would represent a 200 percent increase in the number of flights, compared with 2005.
Lucia Morariu, the director of the tourism agency Eximtur, said that the flights will originate from airports located in Bucharest, Timisoara, Cluj-Napoca and Bacau, 60,000 Romanian tourists being expected to use these services.
"I believe that we will see a minimum increase of 50 percent in the number of clients compared with 2005," said Morariu.
The most desirable tourism destinations are Barcelona, Malaga, Tenerife, Thessalonica, Crete, Cyprus, Tunisia and Malta.
Regarding the prices of tourism packages, they are similar to those offered in 2005 both for internal and external destinations.
Some hotels from the Black Sea beaches will have a two to eight percent increase in tariffs this summer compared to prices from 2005, while on average tourism offers for external destinations will be two percent cheaper.
A week at a Black Sea beach resort, with a stay in a three-star accommodation, will have an average cost of 40 euros in Jupiter, up to 130 euros in Mamaia, the price including breakfast.
The prices in four-star units can reach 170-200 euros per week.
Deputy Prime Minister Gheorghe Copos said in March that the employers' union for the tourism industry and government authorities must develop a series of immediate priorities to enhance local tourism and boost the sector to the position of a national interest industry.
"The government seeks a real partner to discuss and take action," said Copos. The official analyzed with representatives of tourism companies the state of the industry, bearing in mind Romania's accession in the European Union. Copos stated that the government intends to set a few objectives to revive Romanian tourism.

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The quotes for the majority of companies listed on the Bucharest Stock Exchange (BVB) were on a descending trend and showed reduced fluctuation, at an average of 1 percent, on low liquidities.
The BET index, calculated by measuring the evolution of the most listed shares on the BVB, lowered by 0.92 percent and the decrease of the BET-C index, which reflects the market's general trend, was 1.05 percent.
The shares belonging to the BRD-Societe Generale Group were also on a downward trend, the listings decreasing by 0.6 percent, to 4.7 euros per share.
The value of the transactions performed with the bank's shares amounted to 711,000 euros.
Banca Transilvania closed the listings session at 41 eurocents per share, 1.4 percent under the listings reported in the former session.

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Several EU member states said that they will adopt common resolutions regarding the taxing of companies' profits, if a common agreement is not reached among the members of the EU, announced the European Commission, quoted by Reuters.
The EU wants companies with activities abroad to submit financial reports according to a single tax system in order to reduce costs generated by using different tax settlements.
Such a measure would allow a company to compensate the losses registered in an EU state with the profits obtained in another country.
The EU commissioner for taxes, Laszlo Kovacs, intends to make an official request for this purpose, by the end of 2008.

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Interbrew Romania, a branch of the international beer producer InBev, recently invested seven million euros for the acquisition of a beer bottling plant for PET (polyethylene terephthalate) lines of beer, according to the company's general director, Mihai Ghyka.
"PET bottled beer covers at the moment 34 percent of the Romanian beer market. We want to compete for the first position," said Ghyka.
According to its own estimates, the company holds a 14 percent market share in the PET beer sector.
Interbrew Romania's production increased in 2005 by 18 percent and the company reported a 140 million euro turnover.
The official said that the company's market share is 22 percent.
InBev has been active in Romania since 1994.

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The Competition Council has authorized the strategic partnership between Wiener Stadtische and Kardan NV. The two companies control Kardan Financial Services Olanda.
Kardan Financial Services manages, on the Romanian market, TBI Leasing, TBI Broker Asigurare, TBI Credit and Fortuna Credit.
Wiener Stadtische controls Omniasig, Unita, Agras and Autosig.
Kardan, the owner of TBIH Financial Services, announced in 2005 that it had acquired a 49.97 percent share package in Omniasig Life Insurance.
The transfer of the titles was made at a price somewhere between 3.5 and 4 million euros, according to a preliminary agreement signed between the two parties.
Omniasig SA owns 95.95 percent of Omniasig Life's titles, the company's nominal capital being 69 million ROL.

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Another project in Constanta announced by Neocity Group is Neocity Peninsula, a residential project worth some EUR 300 million, in the city?s historic quarter. The others, both in Bucharest and Constanta, are Neopark Residence, Neoforest, Neoresidence, Neolake Residence, and Neocity Office III. These projects are still in the design phase, company representatives said.

Israel-based Neocity Group is planning to put EUR 1 billion into the Romanian real estate market over the next three years, mainly targeting Constanta and Bucharest, Elan Schwartzenberg, president of Neocity, said last week. ?This sum shows our trust in Romania?s potential and development,? said Ehud Benshach, the chairman of Neocity Group.

KLM Royal Dutch Airlines projects ticket sales worth 23 million euros on the Romanian market for this year, despite the fact that it will not introduce any new flights.

Elvila, the largest domestic manufacturer of furniture, controlled by businessman Viorel Catarama, will lay off nearly 10% of its staff this year. Catarama is relying on the personnel cutbacks and the change of the client portfolio to make the company's profitability increase again.

Adjud-based paper producer Vrancart concluded last year with a net profit of 4,734,674 lei, down by 4% year-on-year, and revenues of 53,755,041 lei, down from 70,712,422 lei in 2004. Last year's gross profit was 5,557,068 lei, down by 4%. Last week, the Shareholder Assembly decided to increase the share capital by 4,745,495 lei, equal to 9% of the current share capital. The company will use 4.4 million lei from the net profit made last year and over 295,000 lei from reserves and will issue 47,454,950 shares with a face value of 0.1 lei. The new shares will be proportionally distributed to the existing shareholders. source

A listed Israeli company is currently investing some 5.5 million EUR in building the Nasaud Shopping Center on Nasaud Street in Bucharest. The building is 75% complete and will measure 5,500 square meters in built surface on a plot measuring 10,000 square meters. The usable surface will be 4,500 square meters. The center will also have 118 parking spaces.

In addition to the commercial gallery (banks, pharmacies, perfumery, mobile telephony dealers, shoe stores, gift shops, computers etc), the Nasaud Shopping Center will also have a café and food court and will be opened in September.

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Vices&More, a refined wine store owned by the company Depozitul de Vinuri (i.e. The Wine Warehouse) and located in Plaza Romania posted a year 2005 turnover of over 300,000 EUR. The store is focusing on imported wine (over 80% of the total wine they carry) and especially wine from Australia, Spain, France and Chile.

The store carries some 360 types of wine and also offers shoppers an innovative wine-tasting system based on a value card. Depozitul de Vinuri is owned by RTH Holding, one of the largest Romanian-owned groups of companies.

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The Minister of Economy Codrut Seres asked Hidroelectrica company to analyse and implement a series of decisions regarding the technical possibilities for electrical energy reduction, especially for the balancing of the system, and leading to a complete use of the hydro production on the domestic market, ACT Media news agency reports.

The requirement comes as a conclusion to the measures taken by ANRE together with Transelectica and the similar institutions in neigbouring countries with a view to introducing harmonized procedures of bidding to allocate capacities on the interconnection lines.

Minister Seres had announced at the end of last year that Hidroelectrica would sell the production estimated for 2006 and would inform the eligible buyers of the prices, established according to the conditions on the domestic and international market.

The relations between electricity producer and buyer will be established within a bilateral framework ? contract.

At the same time, bidding will be public and will be organized once a year.

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The Romanian mortgage loan market is estimated to rise by about 35 percent in 2006, and the same growth pace is expected to maintain over the next five years, vice-president of Alpha Bank Romania Sergiu Oprescu told at a conference devoted to mortgage loan in South-Eastern Europe, organized in Bucharest, ACT Media news agency reports.

The Romanian residential mortgage loan market is appraised at around 1.5 billion euros in 2005, according to the Alpha Romania official. ''The extension of mortgage loan for the construction of offices and industrial halls has been legally regulated recently, and the market is expected to develop.

Given the high demand by people who want to build a house, I consider the residential mortgage loan, however, will account for a bigger share,'' said Radu Gratian Ghetea, president of the Romanian Banking Association (ARB). According to estimates, the market of commercial and residential mortgage loan stood last year at about 2.2 billion euros, accounting for around 3 percent of the GDP. The residential mortgage segment is expected to reach a turnover worth 2.2 billion euros this year (accounting for 2.5 percent of the GDP), and to stand at 3.5 billion euros in 2007 (accounting for 3.1 of the GDP), to 8.7 billion in 2010 (6.6 percent of the GDP), respectively 12.8 billion euros in 2012 (8.85 percent of the GDP).

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The Black Sea area needs to reform its energy system and also interconnection, the official of the European Bank for Reconstruction and Development (EBRD) Louis Borgo told at the conference in Bucharest on energy in the Black Sea area. EBRD believes in regionalisation and cross-border flows and continues to support the Black Sea area, Borgo explained, adding that EBRD has projects for all the countries in this area, except for Turkey and Greece, ACT Media news agency reports.

"It is our mission, given that these countries were part of the Communist bloc.

EBRD has to help them switch to a market economy," he said.

EBRD is supporting the reform of the energy field and it wants the liberalisation toward a competitive market to be sped up.

At the same time, the bank is supporting the privatisation of energy companies and private investment in this field, so that the interconnection process viewing regionalisation might be sped up.

One of the key problems in the energy field is the harmonisation of the regulatory frameworks, said Borgo. "Energy reform in this region has to consider first of all the pricing policies.

Price reform should be combined with social protection measures for the vulnerable social groups," the EBRD official said.

At the same time, the billing systems have to be improved, along with the supervision systems.

"Price reforms will draw investors," he said, mentioning that increasing energy prices is the best way to stimulate energy conservation.

Among the things to be mended, Borgo mentioned cross subsidies, costs being covered by prices, and transparency.

"The impact of such measures on the lower social strata should be made known in the Black Sea area," Borgo also said.

"Regionalisation will lead to longer-term sustainable development, which in the energy sector means increased performance, reduced losses, modern technology and prices that cover costs.

At the same time, access to investment should be greatly improved. The final aim is to increase quality for the services to end users," said Borgo.

EBRD has conducted a series of transactions for regional interconnection projects, between Romania and Bulgaria and Romanian and Moldova.

The Black Sea Energy Conference was organised by the Romanian-American Chamber of Commerce, the Chamber of Commerce and Industry of Romania, the Romanian Ministry of Economy and the Ministry of Foreign Affairs.

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Hungarian fuels group MOL has announced on Thursday that on 6 April it signed a sale and purchase agreement with SNP Petrom and OMV Romania on the sale of 30 retail stations and the simultaneous purchase of 11 stations in Romania. The transaction also includes the sale of MOL's Romanian Aviation business.

Following the closing of the transaction, MOL's retail market share will not change significantly and the transaction contributes to the optimization of MOL's retail network in Romania, MOL said in a statement.

In 2006 MOL plans to open 6 new stations in Romania to support our strategic targets in the country.

Closing of the transaction is subject to antimonopoly approval.

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Heads of Government of Macedonia, Albania, Bosnia/Herzegovina, Croatia, Moldavia, Montenegro, Serbia, Romania and representatives of UN Kosovo Administration (UNMIK) signed Thursday in Bucharest a Declaration on expansion of Central European Free Trade Agreement (CEFTA).

The document is based on CEFTA principles, including more advanced elements mainly related to trade disputes, service performances and intellectual property protection.

The Declaration confirms a strong determination for CEFTA enlargement and strengthening, so that trade regime in Southeast Europe is governed by modern, comprehensive and ambitious agreement.

Signing of the document has formalized political negotiations on CEFTA enlargement, opened today by Premiers of the Southeastern Europe, which as announced should be wrapped up by yearend.

Since 2001, SEE countries have concluded 31 bilateral Free Trade Agreements with each other. The commercial exchange within the region increased from Euro 2,6 billion in 2002 to more than 3,5 billion Euro in 2004.

The new CEFTA will enable Macedonia to attract foreign investments and increase its export rate to EU markets, Buckovski said after the Summit.

Today, Buckovski had a meeting with Austrian Chancellor Wolfgang Schuessel, discussing developments in Macedonia since it has become a candidate country for the EU membership."Schuessel has announced new Austrian investments (in Macedonia) as the candidate status for EU membership is a certain signal for businessmen that now is the right time for investing," Buckovski said.

Schuessel said that Macedonia should keep on with reforms. "The candidate status is a magic door. It is opened and now all is up to you," Schuessel said.

At the Summit sidelines, Buckovski also met his Albanian counterpart Sali Berisha and Prime Minister of Kosovo interim government Agim Ceku.

Buckovski and Berisha agreed that Macedonia and Albania should work together on regional projects, in particular infrastructure ones.

Ceku said the border demarcation was a technical issue and would not harm in any way the good neighboring relations between Macedonia and Kosovo.

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Countries from southeastern Europe, mostly the Balkans, agreed on Thursday to launch in September a regional free trade deal that could help prepare the region for membership of the European Union.

he pact will replace bilateral trade deals by expanding the Central Europe Free Trade Agreement (CEFTA) that has served as a trade forum for countries that joined the EU in 2004.

?We have agreed to make the necessary efforts to expedite negotiations and close them by the end of September,? Romanian Prime Minister Calin Tariceanu told a news conference.

EU Enlargement Commissioner Olli Rehn said the deal should boost economic development in the region.

?At a time of major challenges for the countries of southeastern Europe and a certain enlargement fatigue among the European public, it is ever more necessary that you can act together for political stability and economic development,? he said during negotiations on the agreement in Bucharest.

?That may be the most effective counter-medicine against certain pessimism in the EU.?

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The deal will include Albania, Bosnia-Herzegovina, Croatia, Moldova, Serbia and Montenegro, Macedonia and Kosovo which is administered by the United Nations. It should cover competition, intellectual property, public procurement and others issues, the countries said in a statement.

Flagging economic growth in western Europe and high unemployment have fuelled fears that the ?old? EU?s social model is being undermined by low-cost competition from new members, and could be even more so by future newcomers.

Croatia, already a member of CEFTA along with Romania, Bulgaria and Macedonia, started EU membership talks in October.

Macedonia has EU candidate status but no date has been set for talks, while Bosnia, Serbia and Albania are not likely to join within a decade.

Romania, which holds CEFTA?s rotating presidency this year, and Bulgaria are due to join the EU in 2007 or 2008.

The economies of Western Balkan countries lay in ruins for most of the 1990s, with Croatia, Bosnia and Serbia ravaged by war and Albania plagued by anarchy and banking chaos.

Recovery has been slow but steady since 2000, with average growth rates of over 4 percent.

European Commission figures show trade within the region increased to 3.5 billion euros ($4.30 billion) in 2004 from 2.7 billion euros. Its trade with the rest of the world increased to 36.4 billion euros from 30.2 billion euros over the period.

?CEFTA made a valuable contribution in preparing the countries of central Europe for accession to the European Union,? said Austrian Chancellor Wolfgang Schuessel, whose country holds the rotating presidency of the bloc.

?We can now use this experience for the countries of the western Balkans which are all at different stages on their road to membership.? 

Minister for Europe Douglas Alexander welcomed the UK's formal ratification of Bulgaria and Romania's treaty of accession on Wednesday 5 April.

Douglas Alexander MP said:

'The UK has been a strong supporter of Bulgaria and Romania's European Union membership aspirations. The Prime Minister was the first European leader to call for the opening of accession negotiations with Bulgaria and Romania in 1999. Both countries have come a long way since then. The prospect of EU membership has helped Bulgaria and Romania make the political and economic reforms necessary to meet the criteria necessary for full membership.

'I am delighted to announce that the UK formally ratified Bulgaria and Romania?s Accession Treaty. This is a clear indication of our strong support for Bulgaria and Romania's accession. The UK will continue to provide constructive advice and active support to Bulgaria and Romania in their efforts to accede to the EU on 1 January 2007.'

Notes to Editors

1. EU Member States signed an Accession Treaty with Bulgaria and Romania in Luxembourg on 25 April 2005. The Treaty set the terms on which both states will accede to the European Union. For the Treaty to come into force, all of the signatories to the Accession Treaty have to have ratified it by 31 December 2006.

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The Prime Minister Calin Popescu-Tariceanu announced that he endorsed the Memorandum for the sale of 8 percent of Petrom's shares to the employees, ACT Media news agency reports.

Tariceanu said he insisted that employees should buy shares individually, and not through third persons, and added that he endorsed the document in this form.

"I endorsed the Memorandum and I kept my decision that the employees should express their option and buy individually and not resort to third persons," said the PM.

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Most Romanians believe the state of the economy to be worse than last year, according to an opinion poll released on Wednesday. As for the effects of the EU accession, most of the people expect an improvement of product quality, but fear taxes will increase, Nine o'Clock reports.

According to the Gallup, corruption, unemployment, taxation, and public utility tariffs are the main economic issues facing the country according to approx. 80% of the undergraduate and graduate urban population.

The most important economic issues facing companies are taxation (86 per cent), public utilities tariffs (81 per cent), competition (68 per cent) and corruption (64 per cent).

As compared to last year, the economic status has slightly worsened, according to the undergraduate and graduate urban population: 34 per cent said the economy worsened, as opposed to 27 per cent who believe it has improved.

Company managers included in the sample share the same dissatisfaction with respect to the Romanian economy: 42 per cent of the interviewees are dissatisfied / very dissatisfied with the national economy, as compared to only 20 per cent who voiced their satisfaction.

The Gallup poll also indicated that there is some optimism with respect to the coming 12 months.

As much as 48 per cent of the undergraduate and graduate urban population expects the economy to improve, as opposed to 22 per cent who expect further worsening.

Some 40 per cent of the company managers included in the sample expect the Romanian economy to fare better / much better, while 30 per cent fear that it will fare worse / much worse.

Little over a half (54 per cent) of the interviewees believe the Romanian economy to perform poorer than other Eastern European economies. Only 19 per cent claim the national economy performs better.

On the other hand, people have less confidence in private companies running on Romanian capital than in private companies with foreign capital: 32 per cent of the interviewees have more confidence in the former, and 46 per cent in the latter category.

Most interviewees (66 per cent) believe that at present the domestic capital is not adequately represented in the national economy.

The effect of the flat tax rate on companies is seen as positive by approx. one third of the interviewees (27 per cent), with half (53 per cent) saying the introduction of the flat tax rate had no impact on the company and 17 per cent stating the effect was negative.

The main positive effect of Romania?s EU accession, according to the undergraduate and graduate urban population, is that ?the quality of Romanian products will increase, as they will have to cope with a much more competitive market.?

The main negative effect, according to the same category, is that ?taxes and charges will be a lot higher.?

Out of the company managers included in the sample, 68 per cent expect a prospective EU accession in January 2007 to have a rather negative impact on SMEs in general.

Asked about the impact of the EU accession in January 2007 on their own company, expectations are not as pessimistic ? the numbers of interviewees giving positive and negative answers were relatively equal (44 per cent and 45 per cent respectively).

A larger sale market and an increase in orders are the main benefits of Romania?s EU accession in January 2007, as far as companies are concerned.

Competition and competitiveness, adjustment to EU norms are seen as the major difficulties that companies will have to deal with if Romania joins the EU in January 2007.

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ABB Romania, a local subsidiary of the Swiss-Sweden group ABB, providing equipment and services in the energy field, registered exports worth 3.5 million dollars (2.85 million euros) last year; these Romanian compounds and services were used in ABB's projects in France, Ziarul financiar daily wrote, ACT Media news agency reports.


The Romanian providers that ABB cooperates with are IRI, Montana, Delta Invest and IP Automatic Design.

The compounds provided by the Romanian subsidiary were used in ABB's automation technology business.

ABB Romania is one of the main players in the field on the Romanian market, which started its activity here in 1998.

The company operates in Bucharest, Timisoara (western Romania), Oradea (western Romania), Cluj-Napoca (central Romania) and Ploiesti (southern Romania).

ABB Romania has been successfully involved in projects for the national energy system, for which ABB has also obtained the financing.

The beneficiaries of the ABB solutions are the big Romanian companies in the energy fields: Electrica, Transelectrica, Termoelectrica, Hidroelectrica, as well as important companies in the Romanian industry.

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ProLogis Trust is developing its first project in Romania. The publicly held developer and owner of distribution facilities says it has acquired 69 acres west of Bucharest on which it plans to six distribution buildings totaling 1.7 million sf. The total development cost is estimated at $80 million.

The land is located along Romania?s A1 motorway, which is the country?s primary transit corridor. The initial development phase includes infrastructure improvements and two of the four distribution centers, which will total about 609,000 sf.

Completion of the first building is scheduled for December; the second building is scheduled for delivery in January 2007. A source at ProLogis tells GlobeSt.com there are no preleases in place for the park, "but we will be actively marketing the space over the coming months."

ProLogis COO Walt Rakovich says in a prepared statement that the central and eastern regions of Europe have emerged as strategically important areas for industrial distribution. The company has positions in Poland and Hungary and one of the largest industrial platforms in the Czech Republic.

In Romania, Rakovich says he sees robust demand for new facilities and a shortage of supply. Muler Onofrei, ProLogis? market officer for Romania, says the average vacancy rate for modern industrial buildings in Romania today is about 2%, and Romania?s scheduled admission into the European Union in January 2007 should accelerate demand.

?Investing in Romania now will enable ProLogis to leverage its deep existing relationships with global customers and establish itself as a primary provider of industrial space to the Romanian market,? Onofrei says.

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The Central European Industrial Fund (CEIF), administrated by the British Morley Fund Management, has recently acquired Phoenix Business Park, Julian Taylor, manager of Aviva Central European Property Fund (ACEPF), said last week. ACEPF is also managed by Morley Fund Management.

The Romanian consulting services market witnessed considerable expansion last year, to 270-280 million euros according to some estimates, due to economic growth and the forthcoming European Union integration, say representatives of consultancies.

The representatives of the Czech energy group, CEZ, have said they will deliberate over the following days whether the Electrica's crown "jewel" "is worth or not" 750 million euros. Jan Veskrna, 41, CEZ Romania country manager, says the Czechs' strategy for the acquisition of Electrica Muntenia Sud is a solid and accurate business plan, but not an excessive price.

Anchor Grup, the developer of the Plaza Romania and the Bucuresti Mall, will invest approximately 60 million euros in building two residential complexes. "The projects include construction of more than 800 flats that are located close to the two malls," stated Ibrahim Paksoy, general manager of Anchor Grup.

Petrom, the largest company in Romania, which is now part of the portfolio of the Austrians at OMV, yesterday announced that Gheorghe Constantinescu would be stepping down as chief executive on June 15. He will be replaced by Mariana Gheorghe, the representative of the European Bank for Reconstruction and Development (EBRD) to the board of directors of this company.

The Minister of Economy Codrut Seres required the Hidroelectrica company to analyse and put to practice a series of decisions regarding the technical possibilities for the reduction of electrical energy reduction, especially for the balancing of the system, and leading to a complete use of the hydro production on the domestic market. The requirement comes as a conclusion to the measures taken by ANRE together with Transelectica and the similar institutions in neigbouring countries with a view to introducing harmonized procedures of bidding to allocate capacities on the interconnection lines. Minister Seres had announced at the end of last year that Hidroelectrica would sell the production estimated for 2006 and would inform the eligible buyers of the prices, established according to the conditions on the domestic and international market. The relations between electricity producer and buyer will be established within a bilateral framework ? contract . At the same time, bidding will be public and will be organized once a year.

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Minister of Economy and Trade Ioan Codrut Seres announced on Wednesday that Russian company Gazprom is interested in the gas deposit at Roman-Margineni (eastern Romania) . "Thus, in the first half of May, a delegation of the Russian company led by Aleksandr Medvedev, Gazprom's vice-president, will pay a visit to Romania," Seres said. He announced that he had received a letter by which Gazprom expressed its interest in the gas deposit and he added that the issue of gas imports would be also discussed with Gazprom officials. "I intend to also tackle the issue of an old Romanian-Russian agreement, regarding the natural gas and the setting up of a Romanian-Russian joint venture for gas delivery," the minister also said.

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The Competition Council authorized the economic concentration of SC Artima Retail Investment Co. based in Timisoara (western Romania) and SC Lotus Supermakret Oradea, (west), with Artima indirectly controlling SC Lotus, through the Nou Quality System Control Co. The relevant competition body analyzed the compatibility of the operation with a normal competitive environment and reached the conclusion that this operation does not result in restraining, removing or perverting the competition on the domestic wholesale market.The acquiring company was owned by PEF V Investments Holdings SARL, operating on the Romanian market, with 15 Artima hypermarkets in Transylvania (central-northwestern Romania), Banat (western Romania) and Oltenia (southeastern Romania).

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Upon the request of the National Romanian Employers Union, Gallup poll reveals yhat Romanian economy is not prepared for accession to the European Union.The survey was conducted on a sample of 500 businesspeople running small and medium-sized companies and on 400 respondents with high-school and academic studies from urban areas. The sociologists inquired about the businesspeople's opinion about the future of their own businesses after accession and about the impact the upcoming accession will have on the common citizen.

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The contract for the takeover by the Romanian state of the shares held by the South-Korean side in the capital of company Daewoo Automobile Romania could be signed within about a month, Ziarul financiar daily quotes Romanian economy and trade minister Codrut Seres as saying.

"The South-Korean officials will come to Bucharest next month and it is likely we examine the takeover contract of Daewoo, said minister Seres. According to him, the unsolved problems were negotiated and reformulated, and lawyers found the best formula as regards the Romanian government's comfort towards the level of debts.

Presently, says the Romanian minister, the debts of Daewoo Motor Craiova stand at about 550 million euros and they are entirely covered by guarantees from the South-Korean side. Daewoo Motor holds a 51 percent stake in the car manufacturer in Craiova (southern Romania), with the remainder of 49 percent belonging to Automobile Craiova, in which the Romanian state owns a 72.4 percent stake.

The Office of State Ownership and Privatisation in Industry was entrusted by the government to negotiate the takeover of shares owned by the South-Korean company, so that the majority stake could be sold to a strategic investor, reads the same newspaper.

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The European Union extended for three months an import ban on poultry and poultry products from Turkey, Romania and parts of Croatia, after new outbreaks of bird flu, officials said, AFX reports. EU health experts approved a proposal by the European Commission to extend the ban from April 30 to July 31, said the commission in a statement. "The import bans are being prolonged due to new cases of highly pathogenic avian influenza detected in these three countries since the first outbreaks were reported," it said.

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Leader of bicycle makers in Romania, Chinese Eurosport DHS Co. opened on Wednesday a production facility in Deva, north-west of Bucharest, an investment of almost six million euros, with the factory producing one million units annually, the Romania Libera daily says .


Licensed dealers distribute through supermarket chains and the 45 bicycle models manufactured by Eurosport DHS. The Eurosport DHS products are sold in all the Romanian cities with more than 15,000 dwellers, where servicing is also offered.

The Chinese company opened its first production facility more than five years ago in Petrosani, west of Bucharest. It is currently marketing bicycles in Romania, the Republic of Moldova, Hungary, Germany, Spain and France, and its managers think to extend to Albania, Italy and Greece.

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Investment fund "Central European Industrial Fund" (CEIF) managed by the British investment company Morley Fund Management acquired the industrial project Phoenix Business Park located in western Bucharest, under a deal estimated at eight million euros, daily Economistul writes.


Phoenix Business Park is placed two kilometres away from the Bucharest-Pitesti highway. Phoenix Real Estates, which also built the Mercury Logistic Park, got involved in the accomplishment of this objective. Some of the companies that already rented room with this project are FM Logistcis, De Groot or Wilkins.

Julian Taylor, representative of the management of Aviva Central European Property Fund (ACEPF), says that the acquisition of Phoenix Business Park, a property with several corporate tenants, was completed recently, after Morley Fund Management acquired last year another industrial project through ACEPF investment funds.

Taylor says that Romania was included on the list of the countries targeted by the two funds, ACEPF and CEIF, due to optimistic economic forecasts and its potential accession to the European Union. Another reason why investors in real estate are interested in Romania are the investment yields that count to the highest in Europe, but which might decrease after accession.

Taylor added that these funds will take any other occurring opportunity that meets their investment criteria. Morley also manages the investments of Aviva group that announced early this year the launch of two investment programs that will place the funds drawn in on European estate markets in stock listed at the Bucharest Stock Exchange and bonds.

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Azomures maker of chemical fertilisers is functioning again at full capacity, daily Bursa reports. In the first months of 2006, only one production facility of Azomures was is use, because there were huge production costs and the risk of working at a loss, the paper informs.


All of Romania's fertiliser factories were closed between end-January - March 3 as a result of low temperatures outside and a rise in gas prices. The paper quotes fertiliser makers as arguing in order to be profitable, the gas price should be at most $140 per 1,000 cubic metres, instead of $174.5, as recently established by the Romanian National Natural Gas Regulatory Authority.

Azomures uses over 1 billion cubic metre of gas a year for production purposes, having paid over $120 million for its 2004 gas consumption, the paper informs.

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Magnetti Prefabs, the branch in Romania of the Italian producer of building materials, puts its turnover this year, the first in the Romanian market, at 4.5 million euros, the Ziarul Financiar newspaper quotes company officials as saying.

The Italians have invested four million euros in a reinforced concrete prefabs factory, which will start production this April, in Bolintin Deal, where the Bucharest-Pitesti motorway is running.

"The company decided to make investments in Romania two years ago, as it had noticed a rise in demand in this segment of building materials," said Magnetti Prefabs manager-delegate Pietro Carulli.

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Revenues of the state budget increased by 20.3% reaching RON 22.6 bln in the first three months of the year, the better growth (by 24 per cent) being registered by the collections to the state budget ? over RON 14 Bln. according to the data published by the Ministry of Public Finance (MFP), Nine o'Clock reports.


The most important growth of the budgetary revenues was reported in January (27%), and the most important growth of the budget collection elements was registered with the VAT collection that in Q1 rose by almost 35%, to RON 6.2 Bln.

In another view, Government sources quoted by ?Ziarul Financiar? have indicated that MFP would propose to the Government this month the increase of the budget deficit in 2006 from 0.5 per cent to 0.9 per cent of the GDP.

The main reason for this intention is the need to meet extra expenditures to be approved at the first budget rectification this year.

Minister Sebastian Vladescu said the rectification will provide for revenues larger by EUR 325 M (0.35% of the GDP) compared to the previously forecast level.

The public expenditures would in turn be supplemented by EUR 730 M (0.78% GDP), the difference compared to the revenue standing for an increase of the budget deficit by 0.4%.

However, only EUR 230 M of the total expenditures have been assigned a specific purpose.

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The recently completed Black Sea Energy Conference, hosted in Bucharest by Romania's Chamber of Commerce and Industry, discussed various energy-related themes and presented energy projects for the Black Sea area in the near future, along with existing opportunities and challenges to the Black Sea energy markets, ACT Media news agency reports.


The Minister of Industry and Energy of Azerbaijan Natig Aliyev told a panel meeting on the impact of energy on regional stability and economic development that natural gas consumption worldwide has increased at a constant annual pace of 10%.

He mentioned that Azerbaijan possesses significant hydrocarbon resources which commercialisation is part of the energy policy of the country.

He also pointed out that specialists reckon the projects for the energy field have created an attractive environment friendly to foreign investors in the country. In connection with the Nabucco gas pipeline project, jointly carried out by Romania, Turkey, Bulgaria, Hungary and Austria, the participants said this will have a major contribution to the diversification of gas supplying sources as it will offer access for European countries to important natural gas reserves in the Middle East. At the same time, this project was deemed to boost competition on the domestic market of Romania for natural gas, to consolidate Romania's importance as a country crossed by major energy transportation corridors for Central and Western Europe, to boost related industries as a result of the involvement of Romanian goods and services providers, as well as to create new jobs.

EU bodies have acknowledged the importance of this project, and the European Commission included it on the list of priorities under the Trans-European Networks (TEN) project. Official of the Minister of Mines and Energy of Serbia-Montenegro Slobodan Sokolovic mentioned the participation of the oil and natural gas sector of this country in the development of transit and import routes as well as to the interconnection of pan-European pipelines, together with Italy, Croatia and Romania. Fulvio Conti, Chairman of the Administration Board of ENEL, presented the experience of his corporation in Romania following its takeover of the local Electrica Banat and Electrica Dobrogea electricity suppliers, at a plenary meeting on energy policies and strategies.

He said ENEL is contemplating investing some 400 million euros over the next five years in modernizing and improving the supply networks of the companies acquired by it in Romania, in order to bring these companies up to European standards. Government officials from Armenia, Hungary, Romania and Bulgaria talked about the development of energy policies in line with the EU requirements, highlighting the harmonisation of their countries' national energy policies with the EU principles of sustainability, competitiveness and market safety. Director with the US Center for Strategic and International Studies Janusz Bugajski pointed out the need of Europe to break away from what he said is acute dependency on the Russian Federation as far as the supply of oil and natural gas is concerned.

To this end, he suggested that energy sources and transport routs be diversified. According to him, 40 percent of the gas used in Europe originates in the Russian Federation, a percentage that might go up to 70percent in some years. Russian specialists presented a project for synchronous interconnection between the energy systems of continental Europe and the Russian Federation that might benefit 36 countries and 730 million consumers. The attendees in the panel meeting on energy technology and environmental protection unanimously agreed that today's energy systems are a threat to the natural environment, which requires the use of energy resources as eco-friendly as possible.

Deputy Minister for Sustainable Development of Sweden Stefan Stern shared the Swedish experience with the promotion of high tech for energy, given that fossil fuels are becoming increasingly more expensive.

Social and economic costs have to be diminished by a braver approach of bio-energy and biomass, the utilisation of which would lead to a reduction in pollutants.

The experience in the same field of Romanian Petrom company was presented by Petrom President and CEO Gheorghe Constantinescu.

According to him, Petrom has steered production toward the use of the most up-to-date technologies in the world in an attempt to bring about a drastic fall in carbon emissions. Director General of Nuclearelectrica Theodor Chirica talked about the importance of electricity generated by nuclear power plants. The attendees in the panel meeting on opportunities and challenges to the business environment discussed how to improve the investment environment so that each country in the Black Sea area may benefit form as many easy terms as possible for sustainable economic developments. Director of the Chinese Institute for Technological Research Xu Xiaojie campaigned for regional and sub-regional cooperation that will include as many countries as possible, indicating that the presence of Black Sea countries in joint projects for technological and energy development might be a model for cooperation among Asian countries. Austrian specialist Hans Haider said it is vital for the European Union to have a unitary energy policy.

A harmonisation of the various regulations of the relevant bodies from various countries, he said, would allow low-cost production and supply of energy.

The attendees argued that the problem with clean energy relates to price sustainability, because energy could be produced using the beat performing technologies, but there is a risk of such energy being left unsold because it is too expensive.

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Of the seven contestants shortlisted for financial consultant in the privatization of the National Radiocommunications Company SC Radiocomunicatii SA - Radiocom, four banks of international reputation submitted bids in conformity with the task book, by the due deadline of April 3, 2006, informs the Ministry of Communications and Information Technology (MCTI).

The four bidders are the consortium made up of CA~IB Corporate Finance Beratungs Ges.m.b.H and Musat & Partners, the consortium made up of BNP Parisbas and CET, Rothschild and CIE, and Raiffeisen Investment AG.

The completely State-owned Radiocom is one of Romania's main suppliers of radio-communication services, ensuring transmission support for public telephony, mobile phone networks, cable-television, data and Internet transmissions.

MCTI initiated in 2005 the selection of a consultant for the company's privatization in 2006 by the sale of a controlling stake. In 2006 Radiocom had a turnover of about 69 million euros and a gross profit of over 6.1 million euros and expects its revenues to rise by at least 10 percent in 2006.

In 2005 Radiocom made investments worth about 37.2 million euros, the bulk of which were directed towards the broadcasting sector (31.16 million euros), whereas the rest went to the telecommunications sector (4.41 million euros), infrastructure and design (about 1.59 million euros).

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HVB Bank will invest more than 10 million euros to extend its Romanian network by 30 units, among which five in Bucharest, to be added to the current 14 units, Ziarul financiar daily reported, ACT Media news agency reports.


The project is not related to the bank's merger with Banca Tiriac bank, that will bring another 68 branches and offices.

The units will be located in small and medium-sized towns, like Campina (90 km north-west of Bucharest), Sighisoara (300 km north-west of Bucharest), Arad (555 km north-west of Bucharest), Barlad (250 km north-east of Bucharest), Mangalia (250 km south-east of Bucharest) and many other localities.

The new "map" of HVB will change the bank's profile making it a universal bank, after years of specialization in services for companies.

"We want to be present in all the Romanian counties and to grow stronger and stronger where we carry out our operations, by opening one or several branches in the respective town," HVB chairman, Dan Pascariu, said.

HVB hasn't been very well represented in the territory up till now, focusing only on corporate customers.

This policy allowed it to get profitability and a control of the costs better than the competition, in exchange for a slow increase of the assets.

Improving the territorial network has become a necessity, taking into account the orientation towards complete banking services of the entity to result after consolidation with the Banca Tiriac and later with the UniCredit.

The bank to result after the merger will have approximately 130 units and will rank fourth in the system.

The first two players in the banking system, the Romanian Commercial Bank (BCR) and the Romanian Development Bank - Group Societe Generale (BRD), have more than 300 units, and Raiffeisen Bank and Banca Transilvania more than 200 units.

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Greek group Iliotomi will develop a class A office building near the Dambovita quay, Regatta announced last week. Riverside Tower will have 15 floors, and will cover some 12,400 sqm in total. The rentable area will reach around 8,500 sqm.

Starting from January 1st, 2007, private pensions will be introduced, coinciding with the probable collection of the first contributions to optional pension funds, announced Mihai Seitan, head of the National Pensions Office (Casa Nationala de Pensii-CNPAS).

The Home & Design Mall will be extended by 4,000 sqm, owners Stamobi Bucharest, will take out a EUR 5.25 million loan for the project. The company informed the electronic stock exchange, Rasdaq, of the news last week.

Cisco Systems® today announced that UniCredit Romania, part of UniCredit Group, a leader in banking in Central and Eastern Europe, has deployed, at its new headquarters in Bucharest, a new business voice and data communications system built completely on Cisco® technology.

The system provides centrally-managed, high-availability data and voice services for staff at UniCredit Romania?s headquarters and 50 branch offices throughout the country where the solution supports a mixture of Internet Protocol (IP) and traditional telephony systems.

UniCredit has over 50,000 clients in Romania who access the bank?s products and services through a national network of 50 branches. The performance and resilience of the Cisco networking and unified communications infrastructure is critical to UniCredit?s ability to offer a consistent and high-quality customer experience. Cisco Gold Certified Partner Datanet Sytems SRL implemented the new system in less than two months, allowing headquarters staff at UniCredit to relocate to the new building in January without loss of productivity. The system will also provide a scalable and flexible infrastructure to simplify the integration of communications systems to support the rapid growth of the business.

The Cisco Unified Communications system is designed for centralized configuration and administration, allowing branch offices to be remotely managed. This has resulted in significant savings in cost and resources both during deployment and in operation.

"Our aim is to offer a consistent communications service throughout the organisation, regardless of geographic location," said Stefan Panait, team leader Telecommunication & Security Unicredit Romania. "At the same time we needed to reduce operating costs, centralise administration and increase employee efficiency through the integration of our communications service with other services in the enterprise. After careful analysis of the market, we chose the Cisco Unified Communications system, which successfully fulfils these criteria," concluded Panait.

Gabriel Musat, General Manager of Datanet Systems said: "The implementation of the Unified Communications system for UniCredit within very tight deadlines tested our ability to coordinate and execute the project plan with maximum efficiency. Datanet?s experience and the quality of Cisco technologies helped us meet all our objectives and satisfy the customer?s requirements in this project."

"Cisco has helped many businesses to develop their IT strategies to support rapid growth and maintain a high level of customer service," said Bogdan Constantinescu, country manager, Cisco Systems Romania & Republic of Moldova. "Through our customers? successes and with Datanet as our partner, we were able to fully demonstrate the advantages of the Cisco Unified Communications system to UniCredit."

UniCredit Romania has deployed a Cisco Unified CallManager system, voice over IP (VoIP) gateways and Cisco Unified IP Phone 7960G and Unified IP Phone 7921G handsets to support all call-processing functions at the headquarters and 50 branch offices. The Cisco network infrastructure is based on Cisco 2800 Series Integrated Services Routers and Cisco Catalyst® switches.

About UniCredit Group

UniCredit Group is one of the most important financial institutions in the world with a market capitalization of Eur 60 billion and over Eur 750 billion total net assets. The Group is main shareholder of UniCredit Romania with 99.94% shares, being present on the Romanian banking market through UniCredit Romania, HVB Bank Romania and Banca Tiriac, financial institutions with joint net assets exceeding Eur 3 billion. For more details on UniCredit Romania and UniCredit Group, please access www.unicredit.ro or www.unicredit.it.

About Datanet Systems

Incorporated in 1998, Datanet Systems offers a full range of products and professional services for data/voice/video communication networks, including planning, design, solution integration, implementation, operation and optimization services. The company is one of the main suppliers of communication technology for most of the banking, financial institutions and telecom operators in Romania.

About Cisco Systems

Cisco Systems (NASDAQ: CSCO) is the worldwide leader in networking for the Internet. Cisco news and information are available at http://www.cisco.com. For ongoing news, please go to http://newsroom.cisco.com. Cisco equipment in Europe is supplied by Cisco Systems International BV, a wholly owned subsidiary of Cisco Systems, Inc.

# # #

Cisco, Cisco Systems, the Cisco Systems logo and Catalyst are registered trademarks or trademarks of Cisco Systems, Inc. and/or its affiliates in the United States and certain other countries. All other trademarks mentioned in this document are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. This document is Cisco Public Information.

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Rompetrol Petrochemicals, a leading Romanian producer of polyolefins, is to begin supplying polyethylenes to Dow Chemicals. A 14-year agreement between the two companies will see Rompetrol supplying Dow with HDPE and LDPE from its Midia Navodari petrochemicals plant. Output is expected to reach 100,000tpa, with deliveries to Dow in the initial phase amounting to around 60,000tpa. Dow will provide technical support, feedstock and technical specifications of its polymers to Rompetrol. Dow Europe?s president, Markus Wildi, said: ?This provides an effective way for our polyethylene business to develop new market opportunities in eastern Europe.? He added that Dow would bring market knowledge and its process technology to the deal, while Rompetrol?s strength was its strategic position in eastern Europe. source

Countries in the Black Sea region should intensify their activity in the energy sector, by accelerating the pace of investment and trading of energy products, US Ambassador to Bucharest Michael Taubman said at the Black Sea Energy Conference held in Bucharest, Nine o'Clock reports.

According to the US diplomat, the encouragement in the energy sector is an element of cohesion among the nations in the region, because the Black Sea region has important energy resources.

The way in which the resources are being organised and developed will have a major influence on the welfare and stability of all the Black Sea riparian countries, many years into the future, Taubman explained.

In his view, Romania and its neighbours will need to align their policies and strategies in order to ?turn challenges into opportunities for the Government, business environment and for the public.?

Moreover, he said, the Black Sea region could benefit from the harmonisation of trade rules and from a stronger and better-integrated infrastructure.

Interconnections in the power, natural gas and oil sectors will have to be conducted in such a way as to be cost-effective, and their distribution should not affect the region in the even of a pause in the supply, added Taubman.

If appropriate regulations are in place, if there are steady trading procedures, if the authorities have the necessary discretion and knowledge to carry out their duties, the regional investment and trade in the energy sector will grow, the American official also said.

Energy reform ? key element in the sustainable development of the sector

The reform of the energy sector should be the overriding consideration in achieving a sustainable development in the Black Sea region and especially in Romania and Bulgaria, the representative of the European Commission delegation to Bucharest, Onno Simmons in turn stated.

He pointed out that the Black Sea region had an important potential for the transit of natural goods and the regional co-operation had not been a functioning one so far.

According to Simmons, a programme of tarns-boundary cooperation will be promoted for the Black Sea region by 2007.

?The reform of the energy sector is the key element in a sustainable development of the sector?, said the EC official based in Bucharest.

In his opinion, Romania and Bulgaria are in an advanced phase towards the EU, Romania being an important energy processor that meets all the pre-conditions to become a major production centre in Europe.

?There is no room for any political interference with the judicial system?, stressed Simmons, alluding that latest political developments in Romania might hamper the judicial system.

Simmons also said that prices are volatile, demand is continuously higher and the risks posed to the transport networks must be as small as possible.

Minister of Economy and Trade Ioan Codrut Seres said that the generation of energy or to have distribution is not enough and that the competition and liberalisation need to be completed with good regulatory measures and the co-operation among Black Sea riparian country regulators is more than necessary.

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Icelandic generic company Actavis plans to buy Romanian generic drug maker Sindan for $177 million, which is the latest in a chain of acquisitions for Actavis.

Sindan specializes in the manufacturing and distribution of oncology products and has a portfolio of 30 products.

Actavis, whose medicine portfolio includes 600 products, said there is no product overlap between it and Sindan.

Further to Romania, Sindan's marketing and distribution network includes Bulgaria, Hungary, Poland, the Czech Republic, Slovakia and Russia and it plans to enter seven more markets during 2006, Actavis said.

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This new banking center of ABN AMRO Bank Romania will provide services to private individuals and corporate customers. The new banking center brings ABN AMRO Romania?s network to 17 locations throughout the country. The full range of corporate and consumer products will be on offer, including current accounts, cards, overdraft facilities, mortgage and home equity loans, personal loans saving plans, etc. The team is committed to ensuring that all customers are given good advice about which product suits them best.

ABN AMRO Romania team counts more than 700 staff, trained within the international network of the bank, according to its global standards.

"By opening the third banking center in Bucharest we come closer to our customers. The selective development of our branch network is in line with our strategy of combining a physical presence, an active direct sales force and a 24 hours 7 days a week call center for the convenience of our clients. This allows our customers full flexibility in attending to their financial needs in terms of both time and location?, declared Mr. Peter M. Weiss, President of ABN AMRO Romania.

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The volume of transactions via internet - in Romania - reached in 2005 as many as $12.4 million, up 160.8 percent compared to 2004, whereas the number of transactions grew by 264.5 percent, reaching last year 126,352 transactions, according to the figures provided by Visa International, ACT Media news agency reports.

The highest growth registered in terms of the volume of transactions saw Romania (160.8 percent), followed by Serbia-Montenegro (149.7 percent), Bulgaria (126.7 percent) and Croatia (84 percent).

Later in 2005, there were as many 3.6 million visa cards in Romania, up 28 percent as against 2004. Romanians' using Visa cards boomed judging by the numbers of transactions and volume at the end of last year.

The total consumer spending on Visa cards amounted to about $4.87 billion later in 2005, up 73 percent compared to 2004.

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The overall number of transactions reached 60 million, up 24 percent over the end of 2004, showing Romanians' preference for Visa cards for safer and swifter solutions.

The Greek Piraeus Bank, one of the few banks which are not present on the capital market, will take over the brokerage company European Securities, ACT Media news agency reports.


On the other hand, another Greek bank, Egnatia Bank plans to become majority stakeholder in a brokerage company, which has recently changed its name to Egnatia Securities, but whose controlling stake is currently owned by a Greek businessman.

The company has recently changed its name from Netinvest to Egnatia Securities.

European Securities is 40 percent owned by Boulgozo Engineering, a company registered in Cyprus, while Vivid Holdings, based in the Marshall Islands owns 33 percent, with the rest of the shares being held by Greek businessmen.

European Securities is currently one of the middle-sized companies on the market, whose clients include investment funds, particularly Greek ones.

The takeover will also indirectly provide the bank with a 0.7 percent stake on the Bucharest Stock Exchange.

The stake will, however, lose the voting right attached to it, if the company merges with the bank.

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The Romanian franchise market will reach 3 billion euros by 2010; over 400 brands will have presence through this system. At the national level, in 2005, there were 190 active franchise networks, Ziarul finaciar daily wrote, ACT Media news agency reports.


"The retail represents the most dynamic market with the greatest growth potential.

The retail franchises may account for 30-35 percent. Another segment which may also increase is the food and beverages, which will account for 25-30 percent of the market," the manager of the consultancy company for franchises Think Big, Adrian Gheorghe said.

Other consultants count on services in the next years.

General manager of the franchise broker IMO Franchising Group Eugen Driga considers that services like staff recruitment, financial, brokerage, consultancy, matrimonial, tourism, banking, Internet, real estate, but also fitness, catering, auto repair and interior design will dominate the franchise market in 2010.

Driga estimates that over the next four years, at the national level, there will be 50 percent Romanian franchises, 30 percent - European franchises and 20 percent - American.

According to Adrian Gheorghe, the franchise market will grow regardless of the moment Romania will join the European Union (January 1, 2007).

During 2006-2007 Subway, Starbucks (the biggest café chain in the United States), Domino's Pizza and Burger King will enter the market, while Sheriff's, Gregory's, Tip Top, City Grill, City Caffe, Jerry's Pizza and Spring Time will be extended.

The most successful franchised company on the Romanian market is Fornetti.

Being present on the Romanian market since 2001, Fornetti had 410 franchisers across the country at the end of 2005; the company intends to open 200 new pastry units in Romania this year.

The company registered 17 million euros in turnover in 2005, a 70 percent growth as against 2004.

With regard to the presence of other franchised pastry companies, Eugen Driga is reticent.

"This type of franchises will not resist if they don't adapt themselves to the European ecological regulations.

A frozen product, which is transported at minus 16 degree Celsius and which has a different taste after being exposed for three hours to a normal temperature, will not resist on the market.

It resists now due to the legislation," Driga added.

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The Ministry of Public Finance (MFP) has written several drafts dealing with amendments to the Tax Code, with the goal of increasing budget revenues upwards of 30 per cent GDP, and waits for a political decision, with essentially two alternatives to be taken into consideration ? higher taxes or higher deficits, the Finance Minister, Sebastian Vladescu, said, Nine o'Clock reports.

?The game of taxes is for 1 per cent GDP.

In my view, to carry on beating about the bush ?which is the best tax namely ? is not a solution, since we have more important things to do in order to talk of revenues of 33-34 per cent GDP,? Vladescu said.

He also said that the ministry drafted four to five scripts for amending the Tax Code, which stipulate either the increase by three percentage points of the Value Added Tax (VAT), or a mixed solution, to raise the VAT and the flat tax, but also alternatives that include a change in the current level of the two main taxes.

The Fin Min believes that the political decision will translate in either higher taxes or higher budget deficits.

Vladescu is not concerned about the relationship with the International Monetary Fund (IMF), which deemed this year?s budget deficit target as unrealistic.

He said that Romania entered a new cooperation stage with the IMF.

The Minister would not say which alternative he prefers, yet held that any solution should have an impact for a period of three to five years to allow Romania to collect budget revenues of at least 30 per cent GDP.

Vladescu said he did not favour a lower VAT for certain products.

Still the Minister said he would rather incline towards the alternative of taxing new markets, of which agriculture is one of the main fields targeted.

?Not taxing agriculture is the biggest anomaly,? Vladescu said.

The Fin Min also said that the central bank had been presented with all the aforesaid scenarios, yet he still waited for an answer from BNR.

The state will sell the stock package of CEC if a high sum is offered

?The state will only sell the stock package held in the Savings and Consignment House (CEC) if a high sum is offered, with Romanian authorities reserving their right to reject all the efforts, unless the price is satisfactory,? the Fin Min said.

He thinks it normal for authorities to expect a large cash amount for a bank of CEC?s reputation, one of Romania?s oldest banking institutions.

MFP is the sole shareholder in CEC. The pre-selected bidders for the privatisation of CEC are the following banks: the National bank of Greece, Monte dei Paschi diSiena, Dexia Bank, EFG Eurobank, OTP Bank and Raifffeisen.

The IT systems for data exchange within EU regarding the VAT and excises collecting will become functional starting January 1, 2007, although there are delays registered in the implementation process, caused by the wish of the EC to control the auctions, said Sebastian Vladescu.

?If we had started the auction last year in January, instead of October, maybe it would have been better,? mentioned Vladescu.

MFP official showed that the European institution has approved the criteria included in the task books, but later it wanted to check the procedures by which the winners were appointed, and, eventually, it agreed with the chosen suppliers, namely IBM and Oracle.

In Vladescu?s opinion, the two companies will manage to implement the IT systems for VAT and excises in a reasonable time, so that they could become functional on January 1, 2007.

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The Payment Agency for Rural Development and Fishery (APDRP) has approved so far projects totalling ¤718 M, accounting for only 56 per cent of the SAPARD funds the EU allotted to Romania for 2000-2006, Secretary of State with the Agriculture Ministry Danut Apetrei said, Nine o'Clock reports.

The contracting rate is over 56 per cent, which is not satisfactory, Apetrei said.

On the other hand, Secretary of State with the Agriculture Ministry Mugur Craciun stated that agriculture would no longer have red flags, that the flags would change colour at least into yellow, in the May report thanks to the progress made this year.

The representative of the Ministry of Agriculture also said that a discussion was being conducted with the Ministry of Public Finance and with the Romanian Gov?t to give the Agriculture a budget larger by EUR 1 bln in 2007 compared to this year.

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MedLife intends to build five hospitals in partnership with the World Bank, each of these investments requiring some 2.5 - 3 million euros, daily Bursa reports . In Timisoara and Constanta, the construction projects have been approved and the terrains have been bought, therefore the hospitals will be finalised in 2006. At the end of 2007, MedLife intends to inaugurate another three hospitals in Cluj, Bacau and Brasov, the paper mentions. Each of these hospitals will have 20 medical cabinets and two surgery rooms. An official with MedLife said that the company will profit from Romania's EU accession as many small clinics and hospitals with no authorisation will disappear. MedLife will launch medical insurances this year valuing 40-50 euros per month. The company was established ten years ago, registering two million clients by 2004 in Bucharest, where it has 12 centres. MedLife reached the conclusion that quite a number of Bucharest locals want the best specialists in medicine, latest technology and modern services.

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Farmers from the Netherlands, Israel, Austria, Italy and Belgium set up cow farms in Romania, attracted by the low investments required and the fodder's abundance, cheap manpower but also the access to the SAPARD funds and the milk quota Romania has negotiated for the European Union. The milk quota is free and fodders are very cheap. The milk production is a profitable business in Romania, says Hary van der Bruk, the manager of a Dutch farm at Naipu (southern Romania), quoted by Rompres.

About 1.2 billion liters of milk, of the three billion liters a year, Romania and thee EU negotiated, are processed. The 1.8 billion liters left on the free market now will be absorbed by the processors, after 2007, the same daily reads. This is the battlefield. Foreign farmers settled in Muntenia, southern Moldova, Banat and Transylvania, where they bought cheap land, had an infrastructure built for little money and the cheapest manpower is at hand there. Most of the money, between 1.5 and 2 million euros, went to buying best cow breeds and feeding and milking technologies.

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The highest demand for new housing units is originating with the nascent middle-class, whose members draw big incomes and have access to mortgage loans. Analysts reckon the middle-class people are making up 45 percent of the market, which determined real estate developers to switch over to medium-sized business after having met the demand for luxury housing. The new small quarters developed on the outskirts of urban areas are attracting increasingly more people, who prefer to relocate from old blocks of flats to modern houses. The prices for new flats, ranging between 600 and 1,000 euros per square metre, add up to this attraction. The latest developments have convinced homebuilders they have to relocate business to other areas.

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The consumption milk production totaled 13,412 tonnes in January 2006, by 288 tonnes less than in the similar time span in 2005, say National Statistics Institute (INS) data. Milk processing plants put out in the said period 3,381 tonnes of cream, by 623 more than in the same month in 2005. In January this year, 431 tonnes of butter were produced (by 20 tonnes more than a year ago) and 1,130 tonnes of cheese, by 394 tonnes more than in January 2005, cow's milk cheese production being the highest (3,941 tones), the INS data inform. (Rompres)

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According to a survey of the Romanians' living standard conducted by the Romanian National Institute of Statistics (INS) during June 2004 - May 2005. Only 15 percent of the people aged over seven go on holidays. The survey shows that some 55 percent among those spending their holidays outside the locality they live in are young people under 35. They are mostly businessmen (39 percent), followed by the employees (25 percent) and the free lancers working in non-agricultural fields (15 percent). Romanian families of three or four members are more often tempted to travel, while the large families of more than six travel quite rarely (5 percent).

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The transformation of Cosmorom into a successful story, from an operator registering huge losses with only some tens of thousands of users is not a easy thing.In 2005 the Greek company Cosmote, OTE's mobile telephony division, took over a 70-percent stake in Cosmorom (mobile telephony operator) in exchange for 120 million euros, Ziarul financiar daily informs.

The Greek officials pledged at that time an investment worth 450 million in Cosmorom, set up in 1999 as a branch entirely held by RomTelecom. Cosmorom has released its commercial services in May 2000, a few years later than the other two GSM operators (Connex and Orange). However, RomTelecom did not manage to finance at the same time its own development programme and Cosmorom's investment programme, so that the mobile telephony operator had at the end of 2004 a share lower than 2 percent in the relevant market and losses worth hundreds of millions of dollars.

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The value of transactions over March at the Romanian Commodities Stock Exchange /BRM/ and in the territorial branches reached 33 million dollars, according to BRM. The total value of the favourable differences of price obtained for contracting authorities was of 4.3 million dollars. Over the analysed period, at BRM were undertaken 75 procedures of acquisition and sale worth over 28.5 million dollars. The total value of favourable price differences obtained for the contracting authorities was almost 3.9 million dollars.

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The Romanian banking system is solid and clean and has the capacity to be performant, chairman of the Romanian Association of Banks / ARB/ Radu Gratian Ghetea stated on Monday. The ARB chairman announced tha the bankers? association required the government the reduction from 0.4 to 0.2 percent of the level of financial participation of commercial banks to the Guarantee Fund for banking deposits due to the fact that the banking system is « in a perfect condition of health ».

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ProLogis , a leading global provider of distribution facilities and services, announced today that it has begun development of its first industrial facilities in Romania. The company has acquired 69 acres (28 hectares) of land west of Bucharest along Romania's A1 motorway, the country's primary transit corridor. Plans for the site, to be called ProLogis Park Bucharest A1, call for six buildings totaling more than 1.7 million square feet (157,700 square meters) of industrial space. "Over the past several years, the central and eastern regions of Europe have emerged as strategically important areas for industrial distribution," said Walt Rakowich, president and COO of ProLogis. "Our company has been successful in anticipating this trend, and now has market-leading positions in Poland and Hungary as well as one of the largest industrial platforms in the Czech Republic. "We're pleased now to be entering Romania, where we see a combination of robust demand for state-of-the-art facilities and a shortage of high-quality supply. As such, we believe this transaction will deliver real benefits both for customers with European operations and our investors." Initial investment will consist of land acquisition, infrastructure improvements and construction of two distribution centers comprising 609,000 square feet (56,600 square meters), with completion of the first facility planned for the second half of this year. Total investment at the park is expected to exceed US$80 million. "With 22 million people and GDP growth exceeding 5 percent annually, Romania offers tremendous potential for manufacturers, retailers, logistics providers and other companies with distribution needs in this region," said Michael de Jong-Douglas, senior vice president for central and eastern Europe. Muler Onofrei, ProLogis market officer for Romania, noted that vacancy rates for modern industrial buildings are already very low in Romania today -- about 2 percent. "Romania's scheduled admission into the European Union in January 2007 should accelerate demand even further," Onofrei said. "Investing in Romania now will enable ProLogis to leverage its deep existing relationships with global customers and establish itself as a primary provider of industrial space to the Romanian market." ProLogis is the largest pan-European provider of distribution facilities, with more than 72 million square feet (6.7 million square meters) owned, operated or under development in 29 markets across the continent. In central and eastern Europe today, the company's platform totals 11.8 million square feet (1.1 million square meters) concentrated around Prague, Budapest, and the Polish cities of Warsaw, Bedzin, Piotrkow, Poznan, Sosnowiec and Wroclaw. About ProLogis ProLogis is a leading provider of distribution facilities and services, with over 377 million square feet (35 million square meters) in 2,340 properties owned, managed and under development in 77 markets in North America, Europe and Asia, as of December 31, 2005. We continue to expand the industry's first and largest global network of distribution facilities with the objective of building shareholder value. We expect to achieve this through the ProLogis Operating System(R) and our commitment to provide exceptional facilities and services to meet our customers' expansion and reconfiguration needs. source

Consumer credit company Credisson granted EUR 30 million in loans over the first three months of 2006, a 37 percent increase compared to the same period last year, the company announced last week.

George Iacobuta, the domestic manager Areva, the French-owned energy group, says the development of the energy services and equipment market depends on the economic situation of a country, infrastructure, industrial consumers and energy trade.

Antibiotice Iasi, the only Romanian drug maker still owned by the state, is becoming more and more interesting to the foreign investors. This comes after three of the domestic players, Sicomed, Sindan and Terapia, have been taken over in the last six months in deals totalling over 500 million euros.

Local producer Saff Trading has invested EUR 1.2 million to upgrade its confectionery plant in Bragadiriu. ?Investing in new production and assembly lines will allow us to consolidate our position on the market,? Ciprian Scrieciu, general manager of Saff Trading said.

After Romania's accession to the European Union, on January 1, 2007, 60 percent of the small and medium-sized enterprises (SME) will disappear. The ones running foreign capital will replace them, Cotidianul newspaper quoted spokesman for the National Bank of Romania (BNR) Mugur Stet as saying, ACT Media news agency reports.


The statement was made during a news conference with representatives of the SMEs, dealing with the financing of this sector, in which Vice-Premier George Copos also participated.

The harsh enough, but just reaction, as everybody attending the news conference said, of the BNR representative was occasioned by what Florea Parvu, vice-president of the National Council of SMEs, said, according to whom 40-55 percent of the SMEs will disappear after the accession because of the too high interests and guarantees requested by banks for credits.

Vice-Premier George Copos said that if "30 percent of the SMEs are not prepared to cope with the accession, other new ones will be set up accounting for 30 percent too.

In reply, Parvu said that up to 55 percent of the SMEs would be closed down without other new ones being set up as, for 16 years, "Nothing has been done for their capitalization and the banks do not compete loyally."

Mugur Stet explained on this occasion that, in the west, credits were granted, "depending on the business and not with a 4 percent interest" as the banks are no charity bodies.

"The interests in the banking system are quite natural for Romania's level of economic development.

Sixty percent of the SMEs owned by Romanians will disappear and 70 percent will appear running foreign capital.

Quite paradoxically, it is better like this for macro-economy. They know how to work with European funds. This is Romania's most important problem: education. If investments have to be made somewhere, it is in education that they must be made," said Mugur Stet.

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Tikshoov Romania will provide outsourcing telephone services. Israeli company DTH is the first customer.

Kardan Communications Ltd. and Tikshoovim Business Communications Center Ltd. have set up a joint venture, Tikshoov Romania and Cell Center in Bucharest at an investment of $1.5 million. The joint venture plans to expand to Bulgaria or Ukraine, or both.

The venture is based on outsourcing telephone services for companies with many customers. The first customer will be DTH Romania, a satellite services company owned by Freddi Robinson and Dori Dankner. Tikshoov Romania has 100 stations, which the company expects to increase.

Kardan Communications CEO Amit Ben-Yehuda said, ?We?ve begun with an Israeli-owned company, because it?s easier to set up ties, but it won?t end there. I hope that by the end of the year, we?ll have at least one customer in Romania.?

Ben-Yehuda said Tikshoov Romania had growth potential from Western European customers, because labor costs in Eastern Europe were much less than in Western Europe, and residents spoke key languages, such as French, Spanish, and English. The pending entry of more countries into the EU will increase the need for call centers in additional industries, such as health.

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Beef production in slaughter houses in January increased by 1.8 times compared to same time last year, according to data from the National Statistics Institute (INS). Increase in production was followed by the one of beef reserves, up by 61 percent.

At the same, pork meat production increased by 30 percent, up to some 4,462 tonnes. In January, poultry meat production in slaughter houses increased by 8 percent, up to 6,746 tonnes.

According to representatives of the Romanian Meat Association (ARC) the increase in reserves was the result of the decreased in demand for meat products. "The situation is normal for the first months of the year as consumption is lowed at this time, after the peak during the winter holidays," said the representatives of ARC.\

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Tourism & trade company Caraiman, which is headquartered in Busteni, last year made a 226,485 RON profit. This was the result of the sell of assets and is going to be distributed to the shareholders, as dividends.

According to Alexandru Gica, head of the Board of Directors, the company's results were outstanding. Thus, the shareholders decided that the profit should be distributed as dividends. According to latest information, most majority stake, respectively 40.38 percent, is owned by the employees, followed by Alexandru Gica, with 22.31 percent and Valentin Chiritoiu, with 17.55 percent. According to Gica, the overall number of shareholders is of 574.

At present, the company owns two-star Silva hotel and four villas that offer some 43 beds in overall (Micsunica, Clabucet, Susai and Cioplea). This year the company plans to complete several upgrading works at the Silva hotel in order to make it a three-star one.

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Furniture manufacturer Dumbrava last year posted a profit of 558,529 RON, up by 177 percent compared to 2004. The increase in profit came after the company decided to sell some of its real estate. "We sold some of the premises that are located at distance from the current facilities," said Irina Iroib, head of the Board of Directors.

Of the overall profit, 90 percent will be re-invested. "We want to complete the investment for a heating system," she said. The heating system will be used to heat the production facility and contribute to the decrease of gas bills. "We are also planning to purchase two lumber dryers and do some repair work at the production unit," Iroib added. At the same time the company plans to purchase a new processing facility to the end of the year.

Dumbrava company has a share capital of 629,119 RON and the majority stake is owned by Ioan Tatar (41.67 percent), followed by Viorel Hodoiu (6.26 percent).

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Targu-Mures based Azomures company, the main producer of chemical fertilizers will start operating at full capacity from today. Maria Dandarau, leader of the Alternativa 2002 union said: "tomorrow we will be putting at work every facility, including the ammonia department that was shut down a month ago, and people will return to work.

Since the end of January and until March 3, all the chemical fertilizer plants in the country were closed because of the cold weather and increase of price for methane gas. Although some units had paid the contracts, January and February were not profitable months.

Azomores since the beginning of the year operated with only one unit to prevent loses. Maria Dandarau added that in order to make profit, the producers of chemical fertilizers asked for a 140 USD price for thousand cubic meters. According to her, chemical fertilizers are mostly used in agriculture and if such plants are shut down then Romania would have to imports cereals from abroad after the EU accession.

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Iasi-based businessman Danut Prisecariu yesterday organized a press conference to announce the official opening of "Moldova Mall" after two years since the debut of the construction. At the same time, Prisecariu said that Moldova Mall does not belong any more to Moldova Universal as it was sold to British Investment company Equest Balkan Properties. Yesterday's statement confirmed the information that was exclusively published by "Bursa" a few months ago.

Representatives of Equest Balkan Properties attended yesterday's meeting with the journalists and confirmed that the amount they paid for "Moldova Mall" was of 34.5 million EUR. Negotiations lasted for four months. The company's representatives said that they will continue the investment Prisecariu started two years and thus become one of the top important players on the Romanian and Bulgarian markets, with overall investments of 400-500 million EUR over the next year. The next step after the acquisition in Iasi is the opening of a mall in Sofia on May 10th, under a 90 million EUR investment.

Moldova department store opened in 1972 and at that time was the largest and most modern retail facility in Moldova. In 2002, Danut Prisecariu took over the Moldova Universal company and in time purchased all the shares. Afterwards he began upgrading the department store and the result was a mall that includes both the old building and a new one.

The project was named Moldova Mall and the investment Prisecariu poured in amounted to some 10 million EUR. The mall has an overall surface of 20,000 sqm. Moldova Mall is made of over 100 stores. The first, second and fourth floor host apparel shops, while the third floor was given to Media Galaxy. The top floor offers the only multiplex cinema in Iasi, which has three halls. The investment will be completed when work to the underground parking lot is finished by the new owners.

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Eastern Europe is beginning to open up to securitization, the practice of raising funds by selling bonds backed by specific assets or cash flows, according to the online edition of Financial Times. Jonathan Woollett, director for non-bank financial institutions at the EBRD, quoted by the financial publication, says he expects ten to 15 more deals this year, on top of the handful so far ever brought to market, many of which the bank will help to arrange and invest in the more risky deals.
"This year we will see a few more Russian deals and transactions from Kazakhstan and Poland and we hope from perhaps Bulgaria, Romania and Croatia," Woollett says.
This year has already seen some groundbreaking deals. This week, the EBRD bought into a 300 million euros bond issued by Russian Standard Bank, which was backed by consumer lending, in a deal arranged by HVB, JPMorgan and Barclays Capital.
At the same time, Merrill Lynch also brought a 247 million euros deal for Alfa Bank, the first securitization of future cash flows for a Russian bank.
There have also been deals in countries such as Kazakhstan, where ABN Amro arranged a 123 million euros residential mortgage backed bond for BTA Ipoteka, a subsidiary of Bank TuranAlem, a Kazakh bank.
Larger deals run by the big investment banks remain rare, however, and are more related to building relationships for the future and setting up the special purpose vehicles used in securitizations.
In the ABN deal for example, the Dutch bank invested in all the notes itself and will only look to sell them into international capital markets once BTA has managed to originate a larger volume of mortgages.
Kurt Geiger, group director of the European Bank for Reconstruction and Development (EBRD), says investment banks like to do larger transactions, while the EBRD is prepared to arrange and invest in smaller deals to help get the market off the ground. "This is going to remain a market for the specialists for the next few years," he says.
One problem is the low volume of assets available for securitization. Capitalism in the former communist bloc is young. While natural resources are helping economies such as Russia and Kazakhstan, it takes time for the benefits to filter through to consumers, giving them the ability and confidence to buy big-ticket consumer goods or their own homes.

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